Complicated house ownership or not?

Robert_McGeddon

 I think you should seek professional advice from a tax specialist (possibly from an accountancy practice).

Xylophone may very well be right in suggesting that that your father (and mother?) made you a gift with a reservation of benefit. This would mean some or all of the house and land should be treated as part of your father's estate and quite likely be subject to IHT, if not on your father's death then perhaps on that of your mother.

Alternatively, there may be an argument for suggesting that the money you contributed to the land in the first place plus your fathers gift of the remainder of the land to you gave you beneficial as well as legal title before the house was built. There may then be a case for suggesting you allowed your father to build the house on your land and live there rent free after you departed in consideration of you retaining title to both the house and land once your parents no longer lived there. In this case, you might be looking at no IHT at the moment but quite a considerable personal Capital Gains Tax liability when the house is sold.

You haven't given some important bits of information such as the percentage of the price of the land you contributed, its value then, the current value of the house plus land today or how the housebuilding was financed. It probably doesn't matter – it is indeed a complicated situation and adding more information would not improve matters in a forum situation.

It sounds like the potential tax (IHT and CGT) might be several tens of thousands of pounds. In your shoes I would take professional advice. It may cost you £5,000 or so to get peace of mind and quite likely overall tax savings in excess of that sum. You'd likely get estate planning advice in respect of your Mum too.

Robert_McGeddon

Also, depending on the outcome of my post above, form IHT205 may not be approriate.  You shouldn't be applying for probate until the house ownership and consequences are settled.