Inheritance tax

Frankleebrian

Hi there,

I would appreciate advice with the following issue.

My widowed (in 2016) 84 year old mother lives in a house worth about 350K and has about 700k in cash assets.
We are discussing the possibility of my buying her house so that she has immediate cash available to move
into a bungalow if a suitable one comes up for sale. If she died without owning any property (having around one million in cash to her name), would the inheritance tax bill be higher than if she owned a property and had around 700k in cash?

Many thanks.

Keep_pedalling

I am puzzled why she can’t buy a bungalow with the £700k she holds in cash? You buying her house just adds a additional lay of complexity and expense (unless you plan to make it your home).

Assuming you mother inherited your father’s entire estate, her estate currently has an exemption of £1M ( based on your estimated value of her house) down sizing to a cheaper house still allows her executor to claim the full double residential NRB (£350k) so it makes no difference to the amount of IHT due.

As her estate is currently over £1M she should consider making gifts to bring it below £1M although she would have to survive 7 years to make that count.

Rather than buying a bungalow she could also consider renting in sheltered housing or assisted living , again this would not effect the ability to make use of both sets of RNRB.