Joint mortgage with our daughter and inheritance tax

Mutabilisrose

RAS

If that happened as I said to bobster they would take any assets (previous or present)anyway. This is morally and legally their right. So I don’t think of it much as why worry about it. If it happens it would be sad but I wouldn’t expect the taxpayer to fund me so it is what it is. 

Agreed that was not great but again we discussed all of this with her. She was the one who chose what happened and had she not helped most likely was we would have not been able to meet the mortgage payments unless we had been really lucky (unlikely) and got a buyer straight away so there was a high probability that the house would have been repossessed.

Mutabilisrose

Alphatauri said:

You question was about IHT is as a married couple you each have an allowance of £325k plus if you leave part/all  of your estate to your daughter there is a further £175k each ( provided property is £350k+).. This is a joint threshold of £1 million. At the moment you are under this there is no issue.

WRT income in about that 10 years you should both be eligible for state pension which at todays rates is c£10k plus each. A priority is to make sure you will get the full state pension. https://www.gov.uk/check-state-pension

WRT the mortgage I appreciate £1400 out of an income of £3k was a stretch. However, if your daughter is contributing say £200 to the mortgage I recommend you try to over pay by raising monthly payments to £1000 or even £1200 a month (provided the mortgage allows). The latter would save you over £40k and see the mortgage paid off in less than 10 years. 

I would also recommend with ill health/disability looking to move to a smaller property e.g. flat/apartment that will require less maintenance and be suitable should sadly your health deteriorate. This doesn’t have to be now but over the next 5-10 years. Sadly the older we get the harder it is to move. 

Finally, your desire to help your daughter onto the housing ladder is commendable but as other posters have pointed out you are in deprivation of assets territory. 

Thank-you this is what I was after. For some reason I couldn’t understand even after watching Martin Lewis and googling it. We are definitely planning to overpay the mortgage.

When We move out we want a small flat/bungalow ideally so we will have a look. 

A few people mentioned this and I know about it. I am hoping we will not need this but I know they are perfectly entitled to claim present and previous assets. I will have to talk to my daughter and get a plan in place. Maybe in the future she can purchase a second property as a fall back. She will probably get a future inheritance from her grandparents but I didn’t want to over complicate things as I was really only asking about inheritance tax.

Mutabilisrose

Mutabilisrose said:

Alphatauri said:

You question was about IHT is as a married couple you each have an allowance of £325k plus if you leave part/all  of your estate to your daughter there is a further £175k each ( provided property is £350k+).. This is a joint threshold of £1 million. At the moment you are under this there is no issue.

WRT income in about that 10 years you should both be eligible for state pension which at todays rates is c£10k plus each. A priority is to make sure you will get the full state pension. https://www.gov.uk/check-state-pension

WRT the mortgage I appreciate £1400 out of an income of £3k was a stretch. However, if your daughter is contributing say £200 to the mortgage I recommend you try to over pay by raising monthly payments to £1000 or even £1200 a month (provided the mortgage allows). The latter would save you over £40k and see the mortgage paid off in less than 10 years. 

I would also recommend with ill health/disability looking to move to a smaller property e.g. flat/apartment that will require less maintenance and be suitable should sadly your health deteriorate. This doesn’t have to be now but over the next 5-10 years. Sadly the older we get the harder it is to move. 

Finally, your desire to help your daughter onto the housing ladder is commendable but as other posters have pointed out you are in deprivation of assets territory. 

Thank-you this is what I was after. For some reason I couldn’t understand even after watching Martin Lewis and googling it. We are definitely planning to overpay the mortgage.

When We move out we want a small flat/bungalow ideally so we will have a look. 

A few people mentioned this and I know about it. I am hoping we will not need this but I know they are perfectly entitled to claim present and previous assets. I will have to talk to my daughter and get a plan in place. Maybe in the future she can purchase a second property as a fall back. She will probably get a future inheritance from her grandparents but I didn’t want to over complicate things as I was really only asking about inheritance tax.

I forgot to add we both qualify for full state pension.

msb1234

I think your best option is to sell the house and downsize now. Pay back your daughter what she paid in mortgage payments. You seem to have inadvertently created a very complicated situation. 

RAS

Mutabilisrose:

The thread is around inheritance tax. I didn’t understand it. I had looked it up after seeing a Martin Lewis programme. Then I got more confused so I was just really asking so it was clearer. I thought it was £325000 in total assets for me and my husband before the rest was taxed. I have no idea what NRB or RNRB is. But I have found out from this thread that it’s £650000 between us before tax is an issue at least I think I have this right. Maybe next time I should put less background so it’s clearer. 

Your basic NilRateBand is £650k for a married couple.

You've also got a potential ResidentialNilRateBand if you leave your estate to your descendants, regardless of whether you own this property or any property in the future. So if one of you died and the other sold up to go into care, you'd still have the RNRB times two, so up to £350k at present.

You still haven't explained how the property is held. As joint tenants, tenants in common and if tenants in common in what proportions? As that does have an effect on the whole inheritance issue in your family. If you didn't give your solicitor the right information when you made your wills, they could fail or partly fail. If you made your wills before you re-mortgaged, you need find out and to go back to the solicitor.

Mutabilisrose

RAS said:

Mutabilisrose:

The thread is around inheritance tax. I didn’t understand it. I had looked it up after seeing a Martin Lewis programme. Then I got more confused so I was just really asking so it was clearer. I thought it was £325000 in total assets for me and my husband before the rest was taxed. I have no idea what NRB or RNRB is. But I have found out from this thread that it’s £650000 between us before tax is an issue at least I think I have this right. Maybe next time I should put less background so it’s clearer. 

Your basic NilRateBand is £650k for a married couple.

You've also got a potential ResidentialNilRateBand if you leave your estate to your descendants, regardless of whether you own this property or any property in the future. So if one of you died and the other sold up to go into care, you'd still have the RNRB times two, so up to £350k at present.

You still haven't explained how the property is held. As joint tenants, tenants in common and if tenants in common in what proportions? As that does have an effect on the whole inheritance issue in your family. If you didn't give your solicitor the right information when you made your wills, they could fail or partly fail. If you made your wills before you re-mortgaged, you need find out and to go back to the solicitor.

We are joint tenants. I understand it better now thank-you. I also think I definitely need to see a solicitor as you say as we both need to make a will. If we do this we can sort everything out at the same time. Thank-you for your help 😀

RAS

You need to understand the implications of the joint tenancy whilst you are alive, as well as if you die. If daughter was to get into serious debt, (in fact any of you) the others could have issues funding any release of equity. If daughter married and divorced, her ex would be entitled to part of the value of your existing house. Etc, etc.