House from parents

Badegg

Keep_pedalling wrote: »

But that will rise to £450k on April 6, £475k a year later and £500k the year after that. If the OPs MIL is a widow then there is also the transferable nil rate bands which means she could leave up to £1M tax free.

Taking ownership of her home with a substantial part of that being a gift won’t help with IHT if she continues to live in it as that would be a gift with reservation and as such wountfall outof her estate.

Seems to me that this is a rather knee jerk reaction to a problem that may not even exist.

Similar situation to OP however mother is widow. Father died before current family home purchased. Would the IHT limit be 1m too in a few years? We will most likely be moving out of London and purchasing a house where the mother will live with us and pay rent (whilst the current family home is rented out) under the rent a room scheme (which presumably then avoids the "benefit still being received" rule)

Many thanks!

kingstreet

becmarv wrote: »

King street..

Right i think I am understanding you better, so we really need to work out her assets and estates to see how much the inheritance tax would be first. If we wanted to keep the house we would have to pay the inheritance tax of all of her assets not just the house, is that correct?

Apologies if I am missing things.

Yes. It's the assets which form her estate. Everything she owns should be put on a list "estate assets" and everything she owes would go on a list called "estate liabilities" and the Executor is responsible for making sure the liabilities are settled before what is left over from the assets is given to the beneficiaries.

One of the liabilities will be Inheritance Tax based on assets minus liabilities.

becmarv

Keep Pedaling - Not really sure what you are getting at here, what else would it be about?

Noh - That's incredibly helpful, thank you.

Another Joe - You're very right, I think we are very wrong with the figure we were expecting, it seems there's a lot more to it than we thought. .

King Street - Okay I think I am understanding it better, but would definitely need to explain this better to my partner and his mother.

Also, apologies for not being able to copy your replies in the same way, I am a new member and still haven't quite figured out how to hehe

kingstreet

Just press the quote button at the bottom of the post and it creates and copies it into your reply.

becmarv

kingstreet wrote: »

Just press the quote button at the bottom of the post and it creates and copies it into your reply.

You're so helpful, thanks so much :-)

Keep_pedalling

becmarv wrote: »

Keep Pedaling - Not really sure what you are getting at here, what else would it be about?

Saving tax normally. I can’t see the point of trying to hang on to the family home unless it is something really special. His mother may need to move into into smaller more suitable accommodation as she gets older, or even to sell up to move into sheltered housing or care , so it is rather premature to be thinking about inheriting a specific house now.