Mother gifts family home - in return for having rent paid on different apartment

xylophone

I think if i just paid for her rent directly it would be classed as a gift not income?

But it's not a gift is it?

It is in effect a gift with reservation of benefit, the benefit's being the use of your mother's home.

AROON1

hi @elsien   -  thank you. would it really raise questions?  surely the simple answer would be minimising IHT (gifting to children) which seems like a rational thing to do for most people. I know that she wouldn't necessarily need to gift the full value of the property but I'm not sure why gifting such a large sum would seem out of the ordinary to get her under the £1m level of assets (2 NRB + 2 RNRB). (currently she has £1.2m house + £0.5m stocks).

@GBD2222   yes we could afford to buy her a £300k flat to live in. I'm beginning to thnk this may be the better option as then the calculations of stamp duty, and any issues around GWROB /POAT/deprivation of assets are much clearer. plus all the reasons you mention about renting v buying. As it stands she is transferring the whole property to me and we will rent her a place somewhere but i'm mulling the alternatives.

theoretica

It doesn't need to be all or nothing - if she kept 500k and gave you or you and your sister the rest (about 700k) that would get her about to the IHT nil level while leaving her a good amount to secure a permanent home and live on. 

AROON1

@theoretica - thank you yes you are right although £1m now will have grown faster than the NRB probably by the time she passes so might need to be a bit less.