CGT/IHT/GIFTS

De-ogz

Hi, I can't find the answer...

Sister has proposed and mum (82 yo) has agreed to sell her resi to my sister for 50% of its value gifting her the other 50% of its value as "pre inheritance " and in turn giving me the cash as my half of the "pre inheritance".

She lives elsewhere with her partner. Property val about £650k, other cash and assets about £250k. She has the benefit of our fathers (passed 2020) portion of inheritance. 

Being pessimistic, I'd presume (statistically baring in mind age and health) mum will pass within 7 years of this deal being done. 

Q1 will mum have any tax to pay straight away
Q2 will I have to pay any tax on my £325k (apart from interest earned from its investment)
Q3 will there be any IHT if mum passes within 7 years

Anything I've missed?

Bookworm105

please confirm what you mean by lives elsewhere?
- care home? 
- new partner?
- with you father in another property

There are immediate CGT implications depending on your answer 

p00hsticks

Bookworm105 said:

please confirm what you mean by lives elsewhere?
- care home? 
- new partner?
- with you father in another property

There are immediate CGT implications depending on your answer 

I read it as that it's the sister that lives elsewhere, but it is ambiguous. 
OP - can you clarify where both your sister and your mother living, and what is the underlying reason for this proposal ?

poseidon1

OP assuming I understand that 
1) Your father passed in 2020 and mother inherited his entire estate.
2) Your mum is in new relationship and now living permanently at home of new partner
3) Her home now empty 

Then no IHT on the initial gifts when made.

However If your mum did nothing to try and mitigate IHT ( ie kept the house until death), her NRBs and Resident NRBs would be £650k and £350k respectively ( inclusive of your father's transferable NRBs) to give an exempt total estate of £1 million, which means at this point your mother's estate has no IHT exposure.  Her proposed course of action therefore risks  loss of the Resident NRBs worth £350k.

That said, it is possible for her to retain her RNRBs if her proposed actions qualify for ' downsizing relief '. There is a criteria for this relief to apply, which your mother's proposed action just might meet.

However, I would strongly reccomend she seek professional advice with regard to preservation of the Residence nil rate bands ( hers and your father's)  in the circumstances you outline. 

I will leave it to others to comment on the wisdom of your mother's proposed course of action if:

a ) The new relationship does not work out and she has to move out.

b) She has to be admitted to a care home in future and 'deprivation of assets' raises it head with regard to care home fees contributions.