Should Mum buy us out?

Helenochka

RAS said:

You need to give the date of his death as that may affect what allowances she can inherit.

The residence NRB didn’t exist when he died but I understand it is now available to us at the current rate of £175 000. 

Of which about £75 000 has already been used. 

km1500

On the face of it it seems a good idea

Your mum decreases her cash reserves and increases her property - the latter can be offset for IHT purposes against the 100k from your father.

Check how much stamp duty your mum would have to pay on the purchase (if any).

Swapping cash for assets would not be a problem should your mum need means tested benefits eg care home

Once your mum owns the whole property then any increase in value would be cgt-free.

One slight downside is if your mum.lives many years longer and her house increases a lot in value. Rather than just 1/3 being liable for IHT the whole lot will and you may be paying 40% on the whole lot rather than on 1/3

SiliconChip

Unfortunately you'd have been better to have done this sooner so that you could take advantage of the current CGT allowance of £12,500 per person. That changes in April to £6,000 and then in 2024 to £3,000 so you're likely to have a higher tax bill that you would have done had the sale gone through before the first change comes into effect.

Helenochka

km1500 said:

On the face of it it seems a good idea

Your mum decreases her cash reserves and increases her property - the latter can be offset for IHT purposes against the 100k from your father.

Check how much stamp duty your mum would have to pay on the purchase (if any).

Swapping cash for assets would not be a problem should your mum need means tested benefits eg care home

Once your mum owns the whole property then any increase in value would be cgt-free.

One slight downside is if your mum.lives many years longer and her house increases a lot in value. Rather than just 1/3 being liable for IHT the whole lot will and you may be paying 40% on the whole lot rather than on 1/3

Good point as regards the house increasing significantly in value but I think it's unlikely in this case. The house is in N. Ireland and has increased steadily in value over the years but not massively so. 

Helenochka

SiliconChip said:

Unfortunately you'd have been better to have done this sooner so that you could take advantage of the current CGT allowance of £12,500 per person. That changes in April to £6,000 and then in 2024 to £3,000 so you're likely to have a higher tax bill that you would have done had the sale gone through before the first change comes into effect.

Yes, indeed. It would have been better to have acted sooner. 
Still, no point on dwelling on that now. Looking forward, best to sell now while there is still at least some CGT allowance against which to set the increase in value. 

Helenochka

Many thanks to you all. 

On balance, it seems like a good plan. I'll run it past an accountant and then proceed.