Can an elderly mother sell her house and give her son some/all of the money?

g6jns_2

Mojisola wrote: »

It's not £3k a year to any one person; it's £3k a year, full stop.

That could be to one person or split into smaller amounts and given to several people.

The HMR&C site says otherwise. The are a number of reliefs for gifts apart from £3K annual exemption.

Mojisola

Mattygroves2 wrote: »

The normal limit is £3,000 a year to any one person

g6jns wrote: »

The HMR&C site says otherwise. The are a number of reliefs for gifts apart from £3K annual exemption.

There are indeed but that doesn't change the fact that the £3000 a year is a one-off exemption. You can't give £3000 to lots of different people under that rule.

Mattygroves2

Mojisola wrote: »

There are indeed but that doesn't change the fact that the £3000 a year is a one-off exemption. You can't give £3000 to lots of different people under that rule.

Agreed my original wording was clumsy it is £3,000 in total for large gifts but as many gifts of up to £250 as you like. So if you give 10 or even 20 people £250 each and two people £1,500 each you are OK. There are also others including extra for weddings - the HMRC website is the official list.

You can also give as much as you like from income (so long as you maintain your standard of living) but the probate form to prove that is horrible unless the person kept very good records so I wouldn't like to risk my executor having to complete it.

maggieann2luke

I always thought you could give away £3000 in any financial year but if you die before 7 years is up the recipient pays ITax. This can also occur if the person making the gift is diagnosed with dementia/altzeimers in that 7 years.

The dear lady wanting to help her son needs to be very careful. The value of the house will be increasing all the time and she really needs expert help. If she sells the house and gives her son the money then dies within 7 years the son will be slaughtered with ITax at 40pence each £1. The money from the house sale will also gain interest in the bank adding to the value for tax purposes.

Mojisola

maggieann2luke wrote: »

I always thought you could give away £3000 in any financial year but if you die before 7 years is up the recipient pays ITax. This can also occur if the person making the gift is diagnosed with dementia/altzeimers in that 7 years.

You can give away £3k each year without having to be concerned about inheritance tax at all. You can give away more than £3k a year but, if you die within 7 years, those gifts with be considered part of your estate and your estate may have to pay inheritance tax on them. It's only if there is no money left in the estate that the recipient of a gift may be asked to pay the tax.

Deprivation of capital is completely different. There is no 7 year rule.

You won't be asked to pay IHT because the person who gave you a gift is diagnosed with dementia.

The dear lady wanting to help her son needs to be very careful. The value of the house will be increasing all the time and she really needs expert help. If she sells the house and gives her son the money then dies within 7 years the son will be slaughtered with ITax at 40pence each £1. The money from the house sale will also gain interest in the bank adding to the value for tax purposes.

Everyone has an allowance of £325,000 before they pay any IHT. If they can claim unused allowance from a spouse's estate, that is doubled to £650,000. IHT is only paid on the amounts above this - not on the whole estate.

newan

Thanks for all the replies, we managed to get her some good advice from someone at Age Concern and she felt better knowing what were the possible outcomes of her decision. Age concern are now looking into everything for her and speaking to their legal team etc. I think sometimes just the lack of knowledge on things can make you worry, even if it is only a little, having some kind of idea on how things work can be very helpful. Thanks again for all your help.

securityguy

Mojisola wrote: »

Everyone has an allowance of £325,000 before they pay any IHT. If they can claim unused allowance from a spouse's estate, that is doubled to £650,000. IHT is only paid on the amounts above this - not on the whole estate.

And gifts are subject to taper relief, so that if the death occurs more than
three but less than seven years from the point of the gift, the IHT due (if there
is any, see above) is reduced proportionately. It's difficult to construct
scenarios where your estate pays more IHT by retaining money rather than
giving it away prior to death, although I'm sure there are some obscure
situations where that would be true.

Colin_Hunt

Is anyone able to advise me ?
How young do I have to be to decide what I do with my money?
Serious question.
The only "benefit" we as a couple are likely to claim is SRP.

Mojisola

Colin_Hunt wrote: »

Is anyone able to advise me ?
How young do I have to be to decide what I do with my money?
Serious question.
The only "benefit" we as a couple are likely to claim is SRP.

No-one can answer this because the DWP and the local authorities won't put it in writing.

You have to work on the basis that if you're reasonably fit and don't have a health condition that you know will lead to care being needed, you can spend your money as you want.

What's difficult to explain is giving the bulk of your capital away and having to rely on other people to house you. Why would you do this unless you were trying to avoid paying for care in the future?

If you can't give a reasonable explanation, the LA will assume that you have deliberately deprived yourself of capital.

As is often said on here, not many people end up in residential care and, of those who do, the average stay is about two years. Of course, that means many die even sooner and some live for ten years or more.

Colin_Hunt

Mojisola wrote: »

No-one can answer this because the DWP and the local authorities won't put it in writing.

You have to work on the basis that if you're reasonably fit and don't have a health condition that you know will lead to care being needed, you can spend your money as you want.

What's difficult to explain is giving the bulk of your capital away and having to rely on other people to house you. Why would you do this unless you were trying to avoid paying for care in the future?

If you can't give a reasonable explanation, the LA will assume that you have deliberately deprived yourself of capital.

As is often said on here, not many people end up in residential care and, of those who do, the average stay is about two years. Of course, that means many die even sooner and some live for ten years or more.

Our pensions will (I expect) be enough to live on, and pay rent.
So, if I sold up and gave my two kids half a house each (we are under sixty) that would be OK?