Iht and gift of cash

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Daughter gives mother 40k cash in 2020
Mother uses that 40k gift to purchase a house for 650k. The rest of the 610k cash came from mother's savings and a previous house she sold.

Daughter moves in with mother in 2020 to new property.
Mother dies in 2022 , is there any tax implications because of the 40k given to mother , which daughter also benefits from by living in the house?

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  • Keep_pedalling
    Keep_pedalling Posts: 16,792 Forumite
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    If the mother’s marital status was single or divorced then the £40k gift would form part of her estate and as the estate is over £500k then will add £10k of IHT to the estate. If she is a widow then her estate could have exemptions up to £1M so may not matter so much. The gift is also still part of the daughters estate so if she dies within 7 years could be subject to IHT x 3.

    If this is a real case then the £40 would be better given as a loan, or the two of them should be joint owners.
  • V2001
    V2001 Posts: 181 Forumite
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    The property was in mother's sole name and she was a widow. So should it just be left at that and not need to be declared anywhere about the 40k?
    Obviously daughter who made the gift of 40k is still alive 
  • Linton
    Linton Posts: 17,245 Forumite
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    edited 9 March 2023 at 6:38PM
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    The fact that it was a gift would not be declared in any documentation for the mother's estate. OK one exception - if the mother's executors were claiming she was making large gifts from income, then the gift could be categorised as income.

    It may need to be declared when the daughter dies.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    If the mother’s marital status was single or divorced then the £40k gift would form part of her estate and as the estate is over £500k then will add £10k of IHT to the estate. If she is a widow then her estate could have exemptions up to £1M so may not matter so much. The gift is also still part of the daughters estate so if she dies within 7 years could be subject to IHT x 3.

    If this is a real case then the £40 would be better given as a loan, or the two of them should be joint owners.
    The £40k has been spent  no longer part of the estate as cash.
  • Keep_pedalling
    Keep_pedalling Posts: 16,792 Forumite
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    If the mother’s marital status was single or divorced then the £40k gift would form part of her estate and as the estate is over £500k then will add £10k of IHT to the estate. If she is a widow then her estate could have exemptions up to £1M so may not matter so much. The gift is also still part of the daughters estate so if she dies within 7 years could be subject to IHT x 3.

    If this is a real case then the £40 would be better given as a loan, or the two of them should be joint owners.
    The £40k has been spent  no longer part of the estate as cash.
    But it was spent on a house so has not left the estate, just the form has changed.
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