Buying house from spouses family

Keep_pedalling

turnitround said:

Why on earth would someone of 73 want to go into rented and have to pay out a massive lump every month. Have you also considered that having the capital may affect any benefits he may get. What will happen if he needs to go into care and he has given his capitol to his children?

For some people it makes sense, if moving moving into assisted living or sheltered housing I would rent rather than purchase. My FIL did exactly that. Makes sense if you are asset rich but cash poor and can’t afford to maintain the asset.

Keep_pedalling

squarehead94 said:

Keep_pedalling said:

The only immediate tax issue might be CGT if this is not the GP main residence and that would be payable by them and would be based on full market value if sold to a connected person at a discount.

Any discount would be treated as a gift for IHT purposes but again it does not effect you, as any IHT due is payable by estate.

It is his main residence, but what would happen if he didn't leave an estate as such? I know he will have a pension but how much of it left, I am unsure. I wouldn't want to potentially leave his children liable for anything

Based on the value of his home his estate would need to exceed £465k before IHT kicked in (nil rate band + Residential nil rate band). If he is a widower and inherited everything from his wife then her NRB can be used taking that up by another £325k. It does not sound like his assets exceed of those thresholds.

The only time anyone receiving a gift need to consider a future IHT liability is if total gifts exceed £325k and there are insufficient assets left in the estate to pay the IHT bill. This rarely happens.

squarehead94

Keep_pedalling said:

squarehead94 said:

Keep_pedalling said:

The only immediate tax issue might be CGT if this is not the GP main residence and that would be payable by them and would be based on full market value if sold to a connected person at a discount.

Any discount would be treated as a gift for IHT purposes but again it does not effect you, as any IHT due is payable by estate.

It is his main residence, but what would happen if he didn't leave an estate as such? I know he will have a pension but how much of it left, I am unsure. I wouldn't want to potentially leave his children liable for anything

Based on the value of his home his estate would need to exceed £465k before IHT kicked in (nil rate band + Residential nil rate band). If he is a widower and inherited everything from his wife then her NRB can be used taking that up by another £325k. It does not sound like his assets exceed of those thresholds.

The only time anyone receiving a gift need to consider a future IHT liability is if total gifts exceed £325k and there are insufficient assets left in the estate to pay the IHT bill. This rarely happens.

so could he sell the property for 125k, and give away 80k to his two children, without them / him needing to pay any tax? Just I am a little confused regarding gifting money/tax. online it says you can only gift up to 3k per year, however it also says that so long as the estate and gift totals doesnt exceed 325k, you arent liable for any tax. so if property when sold was valued at 140k, sold for 125k, he gifted 80k would the 80k be added on to the value of the property when sold? so would his estate have then been 220k? 

user1977

squarehead94 said:

Keep_pedalling said:

squarehead94 said:

Keep_pedalling said:

The only immediate tax issue might be CGT if this is not the GP main residence and that would be payable by them and would be based on full market value if sold to a connected person at a discount.

Any discount would be treated as a gift for IHT purposes but again it does not effect you, as any IHT due is payable by estate.

It is his main residence, but what would happen if he didn't leave an estate as such? I know he will have a pension but how much of it left, I am unsure. I wouldn't want to potentially leave his children liable for anything

Based on the value of his home his estate would need to exceed £465k before IHT kicked in (nil rate band + Residential nil rate band). If he is a widower and inherited everything from his wife then her NRB can be used taking that up by another £325k. It does not sound like his assets exceed of those thresholds.

The only time anyone receiving a gift need to consider a future IHT liability is if total gifts exceed £325k and there are insufficient assets left in the estate to pay the IHT bill. This rarely happens.

so could he sell the property for 125k, and give away 80k to his two children, without them / him needing to pay any tax? Just I am a little confused regarding gifting money/tax. online it says you can only gift up to 3k per year, however it also says that so long as the estate and gift totals doesnt exceed 325k, you arent liable for any tax. so if property when sold was valued at 140k, sold for 125k, he gifted 80k would the 80k be added on to the value of the property when sold? so would his estate have then been 220k? 

Gifts don't make his Inheritance Tax position any worse - at worst, it just means that some of their value might be added back to the estate (for IHT purposes) if he dies within seven years of making the gifts. Nobody pays tax at the time the gifts are made.