Parents paying off mortgage

CommStone

Hi guys,

We are looking to move from our current house and buy a larger more expensive house. We will probably do this in the summer but in the meantime, my parents are offering to pay our current mortgage off now so we can save more money each month (they’d rather give us the money now when we can use it, than leave it to us as an inheritance). 

The mortgage value is £200,000.

My parents are French, and live there.

Can anyone foresee any Inheritance Tax complications? Any other complications I should be aware of? Would I be liable to pay inheritance tax if, god forbid, one or both parents pass away in the next 7 years. Not sure how it works with an overseas and foreign family?!

MovingForwards

There's no tax on gifts in the UK, however you will need to look up french laws to see if there is and also french laws about how things work when someone dies.

Alternatively, seek guidance from a dual qualified lawyer or your parents speak with their french solicitor / equivalent.

badger09

Your French parents want to give you £200,000 to pay off your mortgage.
There is no gift tax in UK.
BUT You would need to ask an expert in French tax, both gift & IHT or their equivalent. 

xylophone

Is this of interest?
https://www.french-property.com/guides/france/finance-taxation/taxation/gifts-tax/rates

AdrianC

CommStone said:

Would I be liable to pay inheritance tax if, god forbid, one or both parents pass away in the next 7 years. Not sure how it works with an overseas and foreign family?!

YOU don't pay IHT when your parents die. THEIR ESTATE does.

And you would need to ask on a French forum to find out about French IHT law, and whether there's any equivalent to deprivation of assets should they require residential care or benefits.

theartfullodger

I brought up my kids to be self-sufficient: Can't think of any circumstances when I'd do what your parents are planning but, hey, free country.

lookstraightahead

theartfullodger said:

I brought up my kids to be self-sufficient: Can't think of any circumstances when I'd do what your parents are planning but, hey, free country.

I find parents giving away their money really frightening. I think they should either spend it themselves or save it as security for their health provision in the future. However if it's not a lot of their estate I suppose they can risk it. I've been given small gifts from my parents but not so much that it would put their financial welfare in jeopardy.

lookstraightahead

CommStone said:

Hi guys,

We are looking to move from our current house and buy a larger more expensive house. We will probably do this in the summer but in the meantime, my parents are offering to pay our current mortgage off now so we can save more money each month (they’d rather give us the money now when we can use it, than leave it to us as an inheritance). 

The mortgage value is £200,000.

My parents are French, and live there.

Can anyone foresee any Inheritance Tax complications? Any other complications I should be aware of? Would I be liable to pay inheritance tax if, god forbid, one or both parents pass away in the next 7 years. Not sure how it works with an overseas and foreign family?!

Can I just check op, will they still have enough money to pay for their healthcare if they need it in the future? If you tie it up in a house it could lead to problems in the short term future should they need support.

badger09

xylophone said:

Is this of interest?
https://www.french-property.com/guides/france/finance-taxation/taxation/gifts-tax/rates

Zut alors, c'est très compliqué  

 

FTB21

lookstraightahead said:

theartfullodger said:

I brought up my kids to be self-sufficient: Can't think of any circumstances when I'd do what your parents are planning but, hey, free country.

I find parents giving away their money really frightening. I think they should either spend it themselves or save it as security for their health provision in the future. However if it's not a lot of their estate I suppose they can risk it. I've been given small gifts from my parents but not so much that it would put their financial welfare in jeopardy.

Very true, my parents have and still is working hard, looking to retire around 65, dad worked 2 jobs when we were babies to make ends meet, so wouldn't dream of taking their retirement fund, i want them to enjoy the cash while they can now, they've taken care of me and my siblings enough for us to stand on our own 2 feet.

Unless op is taking in mum and dad to live in with them then i guess they'll take care of them financially then this makes sense as they'll benefit too.

CommStone

Thanks for the comments (and opinions). The house that we would be upgrading too would be one that has an annex for them. It’s also a back up plan that should one of them pass away, the other would live with us. They be looking to visit and stay for 3- 4 month a year as well. That’s part of the reason for the cash injection, the other being that rather than leave it to us when the pass on, it’s better used now.
They can afford to do this lovely thing for us.