Inheriting my parents’ house

steampowered

Do you know if your parents are likely to be paying inheritance tax? Looking into that is the place to start. Unlikely under the tax unless your parent's estate exceeds £1 million.

The point about the 7 years rule is that a gift made less than 7 years before your parents die could be subject to inheritance tax. That won't be relevant if your parents' estate won't be above the inheritance tax threshold to begin with.

https://www.gov.uk/inheritance-tax

p00hsticks

bjb0573 said:

Thanks all for the helpful replies.
I did a little research some months and back there seemed to be a figure of "7 years" mentioned with respect to sums that were "gifted" - and whether or not the recipient(s) of those gifts would be considered still possessive of the asset and responsible for further "costs" at a later date. Does anyone know if this is a hard and fast rule?
Regarding the house deeds, i'm pretty certain that my dad has them, but I will check when I speak to him.

The seven years won't apply in this case as the 'gift' would presumably be 'with reservation of benefit' - that is, even if your parents gave you the house, they would continue to live in it. In such cases, unless they pay you full market rent to remain in the property, it would still be considered part of their estate for inheritance tax purposes. However, unless you are living in the property,  you would also become potentially liable to Capital Gains tax on any rise in value of the property from the point at which they give it to you to when you eventually sell it. So it's really not at all tax efficient

3card

Have a quick read of this to give you a brief overview
https://www.gov.uk/inheritance-tax/passing-on-home

When my Dad died he left his half of the home to myself and my brother in trust which meant my Mom could live in it as long as she wanted
After 12 months of so my Mom had to go into a care home but of course this meant releasing my Moms share of the property to pay for her comfortable care. Obviously 50% of the value of the house was disregarded 

If the LA think your parents have passed the property to you to take it out of any future care costs they can go back as far as they want. Some people confuse the 7 year rule will be considered but its not for this purpose
https://www.propertyroad.co.uk/leave-property-to-someone-in-will-uk/

elsien

You also need to consider deliberate deprivation of assets, should your parents need care in future. There is not a fixed timescale on this, the decision would be made be the relevant council at the time. 

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

Mickey666

bjb0573 said:

Thanks all for the helpful replies.
I did a little research some months and back there seemed to be a figure of "7 years" mentioned with respect to sums that were "gifted" - and whether or not the recipient(s) of those gifts would be considered still possessive of the asset and responsible for further "costs" at a later date. Does anyone know if this is a hard and fast rule?
Regarding the house deeds, i'm pretty certain that my dad has them, but I will check when I speak to him.

Even if he has the deeds, the important thing is whether the house is registered at Land Registry.  That can be easily checked online at Land Registry.  Not all property is registered, which is not a problem as such but nowadays whenever property changes hands it must be registered, ie the 'first registration' process that FreeBear mentioned.  This can take some time and could delay sales and inheritance transfers, hence the advice to sort it out now.  There are no tax/gift implications if registered in the current owners name.

Johnhowell

If your parents do have the original house deeds, I would strongly recommend that these are requested to be returned after the First Registration process.  There can be clauses in the original deeds that do not get copied over the Land registry version.
Good luck,

Linton

Your parents signing over their home to you would be very foolish on their part.  I strongly suugest that you dont propose the idea, and if they think of it first persuade them not to.  The problem is the "what happens if"s.  For example....
1) You die first
2) you become bankrupt and the house has to be sold to pay your debts.
3) You divorce and your assets have to be split.
4) You and they fall out and you throw them out of your house - I believe this has happened.
 
It is a totally unnecessary risk for them to take.  It could also  be unsuccessful in achieving whatever reason you might have for  them to do it.  Finally it could lead to greater cost than if you/they had simply let events take their natural course, especially as most people dont go into care or pay IHT.

Robin9

70s is young. Encourage your parents to future proof their house - bathrooms, kitchens -  enjoy themselves (when we can get out and about, holidays ...............................

lookstraightahead

Very silly on their part. 

Have they made any plans for their 'care' when they do become older (they're quite young at the moment and might both live at least another 20 years, indeed one might live out you potentially.

lookstraightahead

What they can't do is gift it to you thinking after 7 years it won't be seen as deprivation of assets. That is to do with IHT. You can go as far back as you like with deprivation of assets.