Homewise query

waribai

Hi,
My mother saw a place advertised by Homewise and rang to make an enquiry. They said a Homewise plan for her would be perfect because she has a property currently worth £800k which she wants to sell and £600k in savings. So, at the moment when she passes away there will be inheritance tax for us to pay. If she moves into one of their properties at £250k that would reduce the Inheritance Tax bill. Is this true? It sounds fishy....

AskAsk

it would reduce the inheritance tax in the sense that she will have 250k less 

greatcrested

Is she going to sell the £800K property? What will she do with the £550K after buying the Homewise property?

How is this going to reduce the IHT?

Is the Homewise property a nicer place to live than her current £800K home?

greatcrested

So it's this?

https://www.homewise.co.uk/home-for-life-plan/

The Home for Life Plan offers a simple way for you to afford your next home. Providing you with a key step forward to securing your future, with a Lifetime Lease.

Sounds to me like she can already afford her next home!

waribai

Hi,
Thanks for the replies. She wants to downsize basically. The property she lives in is detached and isolated. She wants to move somewhere where there are more people around. So, it's not necessarily a nicer property aesthetically but better suited for her at this stage of life.

greatcrested

Given she has £800K plus £600K and wants to downsize, why on earth does she need a lifetime lease?

This is basically just an expensive mortgage which gets repaid when she dies.

Just let her find an appropriate property, buy it for cash, and write a will.

davidmcn

Frittering your money away on things which are poor value will indeed reduce your Inheritance Tax bill...

greatcrested

Ah! Makes sense. I was wondering where the IHT saving was.

Donating to charity would also reduce IHT.

dimbo61

What a rubbish statement.
If she sells the £800,000 property she will /You will have a much bigger inheritance tax bill.
If mum is in good health and gifts some of her money to family, friends and charity and lives another 7 years No problem 

davidmcn

greatcrested said:

Donating to charity would also reduce IHT.

"Donating" to anybody (and then surviving at least two years, preferably seven) would reduce IHT.

AskAsk

i think what they are saying in an indirect way, is that she can give the money away so when she does pass away, there will be less IHT.  or spend it all on holiday of a lifetime.