Future Inheritance/Capital Gains Taxes

Keep_pedalling

JBTISH said:

If she gifts me £175,000 to buy my share, am I right in saying there is nothing to pay tax wise as long as she remains alive for 7 years to the day but if she passes away then that sum would be subject to Inheritance tax? The other side of that coin is that that would be seen as ‘deprivation of income’ from the perspective of her Pension Credit Benefit. 

Thank you again

IHT only applies to gifts in excess of the NRB (£325k), and we have already established that her estate is not in IHT territory anyway so that is a double no. 

p00hsticks

JBTISH said:

If she gifts me £175,000 to buy my share, am I right in saying there is nothing to pay tax wise as long as she remains alive for 7 years to the day but if she passes away then that sum would be subject to Inheritance tax? The other side of that coin is that that would be seen as ‘deprivation of income’ from the perspective of her Pension Credit Benefit.

I think this is the first time you;ve mentinoed that she is currently in receipt of Pension Credit ? As you say, I donlt think she wouldt continue to be eligible for it after giving away £175,000

Jeremy535897

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

p00hsticks

Jeremy535897 said:

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

I'm struggling to follow the posts, but my impression was that the money would possibly be coming from selling an inherited property in France that the sister currently lives in but the mother part owns .....?

But it;s not very clear as the OP only mentions this in passing at some point well into the thread...

Jeremy535897

p00hsticks said:

Jeremy535897 said:

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

I'm struggling to follow the posts, but my impression was that the money would possibly be coming from selling an inherited property in France that the sister currently lives in but the mother part owns .....?

But it;s not very clear as the OP only mentions this in passing at some point well into the thread...

I guess this would count as an investment anyway, which would deny pension credit.

JBTISH

p00hsticks said:

JBTISH said:

If she gifts me £175,000 to buy my share, am I right in saying there is nothing to pay tax wise as long as she remains alive for 7 years to the day but if she passes away then that sum would be subject to Inheritance tax? The other side of that coin is that that would be seen as ‘deprivation of income’ from the perspective of her Pension Credit Benefit.

I think this is the first time you;ve mentinoed that she is currently in receipt of Pension Credit ? As you say, I donlt think she wouldt continue to be eligible for it after giving away £175,000

Yes this is correct. Above £15,000 you loose your Pension Credit at a tapered rate. You can still apply and it will be considered under certain circumstances but it would be lost in this specific scenario.  It is for this reason I debating her gifting a cash sum representing 50% of the property against just naming me on the deed as a 50% part owner. Thank you for replying p00hsticks.

JBTISH

p00hsticks said:

Jeremy535897 said:

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

I'm struggling to follow the posts, but my impression was that the money would possibly be coming from selling an inherited property in France that the sister currently lives in but the mother part owns .....?

But it;s not very clear as the OP only mentions this in passing at some point well into the thread...

Yes this is correct. The money will come from the sale of a property in a France that she has never lived in that her sister lives in. 

JBTISH

Jeremy535897 said:

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

Hi Jeremy535897

she currently has very little, less than £1000 or no savings depending on the time of the month or year. She will have at time of sale about £350K pre French and UK CGT which she will either have to live off and forfeit her PC, HB and CTB. Alternatively she will have to buy a home and account for future repairs and upkeep and then reapply for her PC only.

JBTISH

Keep_pedalling said:

JBTISH said:

If she gifts me £175,000 to buy my share, am I right in saying there is nothing to pay tax wise as long as she remains alive for 7 years to the day but if she passes away then that sum would be subject to Inheritance tax? The other side of that coin is that that would be seen as ‘deprivation of income’ from the perspective of her Pension Credit Benefit. 

Thank you again

IHT only applies to gifts in excess of the NRB (£325k), and we have already established that her estate is not in IHT territory anyway so that is a double no. 

Thank you. That’s good to know. I’m amazed that one person can give such a large sum to another without England wanting something. 

theoretica

It was mentioned above, I think, the disadvantages of you or your sister owning property if you now or in the future claim means tested benefits.  Now you have mentioned that your sister is disabled, I think there is another avenue worth exploring - which is a disabled person trust.  If she qualifies, these can be set up so that the disabled person can benefit from an inheritance without their means tested benefits being affected.  This is not one to DIY, but needs a solicitor who understands them, and would need to be reviewed regularly as the rules do get changed.