Mum selling home to move in with me 12 October 2022 at 10:01AM in Cutting tax 7 replies 352 views

ksdbvv

I've been a full-time carer to my mum for the past year, she's getting to that stage where she'll require round-the-clock care, and we've agreed that she will sell her bungalow and move in with me, but to make my home fully accessible building work will need to be done.

My question is this: around a quarter of the proceeds from selling mum's property will be used for the building works to my home, leaving her the balance. Her property is currently worth around £400k. Our concern is that if she were to die before seven years have passed, will the money invested in my property (she won't be on the deeds) be liable for inheritance tax as it originally was hers? Mum will live with me permanently, and I will remain her carer.

purdyoaten2

As with a lot of these scenarios - is her estate sufficiently large to attract any inheritance tax?

Jeremy535897

This would seem to fall within the POAT rules, which are very complex. However, they do not apply if the market rent that would be payable would be less than £5,000, or an election to treat the gift as a gift with reservation was made. Some brief guidance at https://www.gov.uk/guidance/work-out-inheritance-tax-due-on-gifts

Keep_pedalling

I don’t think this is anything to worry about, if her estate is in IHT territory then the same amount of IHT would be due if she did not put the money into adapting your house. If she does not have much in the way of savings then her estate will not have an IHT liability anyway as she has at least £500k of exemptions and up to double that if she is a widow.

DBdoobydoo

First off how would HMRC ever know about the OP's mother spending money on the OP's house? Secondly if the money is for buildings work to make the home fully accessible for the mother is this even a gift to the OP; surely it's money spent by & for the mother?

Albermarle

Keep_pedalling said:

I don’t think this is anything to worry about, if her estate is in IHT territory then the same amount of IHT would be due if she did not put the money into adapting your house. If she does not have much in the way of savings then her estate will not have an IHT liability anyway as she has at least £500k of exemptions and up to double that if she is a widow.

As she will have sold the her home, she can not leave it to her children in her will. So presumably her nil rate band for IHT will be £325,000, and not £500,000 ?

Keep_pedalling

Albermarle said:

Keep_pedalling said:

I don’t think this is anything to worry about, if her estate is in IHT territory then the same amount of IHT would be due if she did not put the money into adapting your house. If she does not have much in the way of savings then her estate will not have an IHT liability anyway as she has at least £500k of exemptions and up to double that if she is a widow.

As she will have sold the her home, she can not leave it to her children in her will. So presumably her nil rate band for IHT will be £325,000, and not £500,000 ?

No, the RNRB can still be claimed where someone has sold up to move into more suitable accommodation. This may be sheltered housing, care home or moving in with family. You can also base the allowance on the value of a previous home if you downsize to a smaller cheaper home.

Albermarle

Keep_pedalling said:

Albermarle said:

Keep_pedalling said:

I don’t think this is anything to worry about, if her estate is in IHT territory then the same amount of IHT would be due if she did not put the money into adapting your house. If she does not have much in the way of savings then her estate will not have an IHT liability anyway as she has at least £500k of exemptions and up to double that if she is a widow.

As she will have sold the her home, she can not leave it to her children in her will. So presumably her nil rate band for IHT will be £325,000, and not £500,000 ?

No, the RNRB can still be claimed where someone has sold up to move into more suitable accommodation. This may be sheltered housing, care home or moving in with family. You can also base the allowance on the value of a previous home if you downsize to a smaller cheaper home.

Thanks for the clarification, I remember now !