Inheritance tax

TBagpuss

As others have said, you need to get proper advice so you understand the implications of the plan.

These include:

- you and your siblings may have to pay Capital Gains Tax when you sell the property, if it increases in value between now and then.
- Your mum risks deprivation of assets - i.e. being assessed for the purposes of paying for care, as if she still owned the house
- SH is giving you and your siblings a share of the house, but is going to live there - this is likely to be a gift with reservation( unless she pays open market rent for the proportion of the house she is gifting) so IF her estate attracts inheritance tax, that tax will still be payable .


The simplest option may be for you and your siblings to simply LEND her the money - she would pay off her mortgage, you and your siblings would have a legal charge over the house for the amounts you provide , repayable on her death or if the house is sold before that.
Alternatively, you could each simply buy a share and she can retain ownership of the balance - assuming you have 2 siblings that would mean you, your siblings and your mother would all be owners of the property, and you could have a declaration of trust drawn up which set out your respective shares - e.g. if the house is worth £150,000 and you and your siblings are each putting in £14,000, then each of you would have 9.3% and your mum would still own the other 72%, which she can leave you by will. The declaration of trust can set out the circumstances in which the property can be sold which would protect your mum from being forced out if one of you decide you wanted your money back

steampowered

Why do you think it is a good idea to put the property into the name of the children and their spouses?

It is often better to leave the house in her name and for her to make a will. Though I guess transferring the property now would put people's mind at rest that the will cannot be changed later.

Transferring the family home to your names will not reduce inheritance tax. This would be known as a "gift with reservation of benefit" - the house will still be included within your mother's estate for inheritance tax purposes.

You do NOT get to take advantage of the 7 year rule which applies to gifts. If your mother remains living in the house, the house will be fully counted for inheritance tax purposes, regardless of how much longer she lives.

Would you be paying inheritance tax anyway? There is a £325,000 nil rate band on which no inheritance tax is paid. There is an additional £175,000 nil rate band for inheriting your mother's main residence. These figures will be higher if your mother inherited from your dad, in which case you will also be able to add your dad's nil rate band.

Is your mother's estate worth more than £500k? If the answer to that is "no", the estate wouldn't be paying inheritance tax anyway.

Also consider that this would be a "second property" - you'll need to think about things like capital gains tax when the property is sold, and possibly even higher rate stamp duty if any of your siblings are first time buyers. 

MobileSaver

Grumpy_chap said:

Traceyaylmer said:

 has to be payed by tomorrow in fact.

Why does it have to be paid by tomorrow? 

I was thinking it might be an interest-only mortgage coming to the end of its term with no repayment plan in place?

Traceyaylmer

Thank you everyone its now sorted, you all have great advice i have learnt alot, my sister has rared at our solicitors as they havent been very good and we have rang them every day to be fobbed off with a call back which never happens. 

Yes it was an interest only mortgage and mum couldnt afford it so we wanted to pay it off with hard earned savings.

Our husbands were the  actual ones paying it so added them on.

Although we love our mum dearly and wanted to help her out we didnt trust her to leave it to someone else in her will as we heard a rumour and she lies so much unfortunately. 

It is way under the price so no inheritance tax to pay and wouldnt be worth that in years to come.

Thank you again, its my frirst ever post so im grateful 🙏