help on inheritance tax issue uk
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pablogp
Posts: 23 Forumite
in Cutting tax
Good Morning,
3 years ago, my parents put the family house in my sister and my name. It was valued at £500k approx.
My mother has two other properties which she is thinking of putting in my sister and my name.
I would now like to purchase a property with the financial help of my parents, with each of them giving me £100k for the deposit.
I am slightly unsure as to how inheritance tax works, even though the government website seems clear. Are my parents able to provide all of the above without my sister or me paying inheritance tax if nothing happens to them within 7 years? Or is there a limit to what they can actual give us?
thank you in advance.
3 years ago, my parents put the family house in my sister and my name. It was valued at £500k approx.
My mother has two other properties which she is thinking of putting in my sister and my name.
I would now like to purchase a property with the financial help of my parents, with each of them giving me £100k for the deposit.
I am slightly unsure as to how inheritance tax works, even though the government website seems clear. Are my parents able to provide all of the above without my sister or me paying inheritance tax if nothing happens to them within 7 years? Or is there a limit to what they can actual give us?
thank you in advance.
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Comments
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Good Morning,
3 years ago, my parents put the family house in my sister and my name. It was valued at £500k approx.
My mother has two other properties which she is thinking of putting in my sister and my name.
I would now like to purchase a property with the financial help of my parents, with each of them giving me £100k for the deposit.
I am slightly unsure as to how inheritance tax works, even though the government website seems clear. Are my parents able to provide all of the above without my sister or me paying inheritance tax if nothing happens to them within 7 years? Or is there a limit to what they can actual give us?
thank you in advance.
No limit on potentially exempt transfers into both of your names. However, your mothers residence would be included in her own IHT calculation, as she has retained the benefits of the property. Even, though it is in your and your sisters name.
Your mother should also take independent legal and finqcial advice, she is giving away her property, if you Orr your sister default on debt, your mothers gifted properties could be used as assets to repay debt0 -
thank you for your response and help.
sorry to be slightly ignorant, but I don't understand how my mother's residence would be included in her own IHT. Do you mean the family house or the other two properties she is thinking of putting in our name?0 -
Look up on HMRC
gift with reservation
preowned assets0 -
will do, thanks for your help.0
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Are your parents still living rent free in the family home?
http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm04072.htm
https://www.gov.uk/inheritance-tax/passing-on-home
http://www.telegraph.co.uk/finance/personalfinance/tax/10664846/Can-I-pass-my-properties-to-my-children-and-cut-my-tax-bill.html
CGT on transfer of remaining properties?0 -
if the family property is being lived in my your parents then is doesn't count as a potential exempt transfer and so will be included in her estate when she dies even if this is more than 7 years time
also, if you ever sell the family home, you will be liable to cgt on any gain as you don't live there
so HMRC gets a double helping;0 -
thanks for your reply.
My father is now living in Spain in a property he inherited from his parents. We (sister and I) are not looking to put this in our name just yet.
I am the only person living in the family home which was put in our name 3 years ago.
My mother has 2 properties, one she is living in, and the other she rents out. These two properties we are looking to put in our name now to avoide IHT.
Essentially, no one is paying rent and none of the above properties have a mortgage (although not sure if this is relevant)0 -
The other thing you need to be clear about is that you don't pay any IHT at all, it's your mother's estate that would have to pay it. If the entire estate comes to you and your sister then the effect is that you're paying it, but there is no liability on you personally (although that's not the case with the CGT issue that CLAPTON has raised).0
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You and your parents should take advice from an expert in UK/Spanish tax and IHT/CGT?
http://www.expertsforexpats.com/expat-tax/capital-gains-tax-for-british-expats/
http://www.osborneclarke.com/connected-insights/publications/new-tax-treaty-spain-uk/0 -
The other thing you need to be clear about is that you don't pay any IHT at all, it's your mother's estate that would have to pay it. If the entire estate comes to you and your sister then the effect is that you're paying it, but there is no liability on you personally (although that's not the case with the CGT issue that CLAPTON has raised).
thanks, but this is assuming something happens to her in the next 7 years? If nothing does happen, I assume she is not liable to inheritance tax?0
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