Gifting Half the house and IHT

F2KSel

Back in 2004 my mother gave me half the house. The Land registry shows it is now joint owned.

There is also a letter from the solicitor confirming the transfer is complete and that we are tenants in common with equal shares.

We both lived in the house until her death.

Is that enough proof for HMRC?

Grumpy_chap

Is her Estate at the IHT threshold in any case?

Keep_pedalling

Because this has been your home since she gifted you a share in her house for IHT purposes that gift will have dropped out of her estate in 2011 so the total value of her estate is 50% of the house + all her other assets. Do you have an approximate value for that?

Based on a previous thread you mother was widowed 25 years ago, did she inherit everything from her husband? If she did and her estate is below £650k you won’t even need to do an IHT return.

mybestattempt

https://forums.moneysavingexpert.com/discussion/6654308/gifting-half-the-house-and-iht

HMRC will be able to see the Land Registry details for themselves and will assume equal shares as tenants in common unless they have reason to think otherwise.

If HMRC do ask for proof then what you have should be sufficient, in fact I don't think there is anything more they could ask for.

poseidon1

Might be worth reminding everyone of the gift with reservation ( GROB) rules as it applies to gifts of a share of the family home - see below

https://www.countrywise.org.uk/files/Main_Residence_s102b_4_-_Concession_to_the_GROB_rules.pdf

The OP certainly satisfies the condition of co occupation of the property subsequent to the gift, but what was the arrangement regarding payment of household bills? Was there a 50:50 arrangement in place or did the OP assume the entire burden of paying those costs, subsequent to the gift?

Section 102 (b) (iv) does require the mother reserve no benefit from her gift by ensuring household bills are paid on an equal basis, and one might have hoped the solicitor who dealt with the gift advised accordingly.

The OP maybe fortunate and HMRC choose not to look beyond the gift supported by co occupation and accept the mother only had a 50% share on death.

However, if strict adherence to the GROB rules could lead to a potential IHT liability if the half share is counted back into the estate, the OP should perhaps prepare themselves for questions from HMRC related to the basis for the occupation as it pertains to paying household bills and property maintenance.

GDB2222

in a situation like this, how much is a 50% share valued at? 50% of OMV? Or, is there a discount?

F2KSel

Thanks for the replys, if the total value of the house is included with the rest of her estate it could be around 700k-800k.

Keep-pedalling It will be less than 650k as my father passed it 2001 when IHT was 242k, I think the max she is allowed would be 567k including the 175k towards the house.

I wish I hadn't read your post posiden1.Unfortunately she did pay most of the bills, knowing my mother she probably wasn't told about paying the bills equally or she would have on top of that.She had a massive stroke in 2008 since then and I just kept paying the bills in the same way they were always paid, I did all the work and she paid most the bills. So it looks like I'm in trouble on that one.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81874816#Comment_81874816

The transferable NRB is based on the percentage used on the first death not the amount it was at the time so the full £325k can be used for the transferable NRB.

You are not really in trouble with her paying for the bulk of the household expenses, I think the safest thing to do treat it as a gift with RoB. You still won’t pay any IHT but you will need to do a full IHT return to claim her residential NRB.

Grumpy_chap

I understand that the amount of the IHT that passes between spouses is reduced by percentage rather than absolute value. So, it might have been a threshold of £242k when your father passed and none of that was used, so zero percent. AIUI, that now becomes zero percent used of the current threshold £325k.

If that is correct, your mother would have the £650k IHT threshold nil band.

Was the house in question the PPR for both your mother and your father? I assume it was.

Is the house now left to you?

That would mean your mother would also have two residential allowances £175k so that means £500k for your mother and £500k for your father, so £1m in total.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81875024#Comment_81875024

I agree.

With two full complements of NRBs, there will be £1million available to shelter your mother's estate (assuming house is £350k +), whether or not GROB leads to your half share of the house counted back in.

It does mean you will have to complete the full IHT 400, but not to much of a hardship when you know the effort results in complete avoidance of IHT.

dales1

"Unfortunately she did pay most of the bills .. So it looks like I'm in trouble on that one"

No there's no trouble there (as K-P has said) ( … but just to clear your mind on that score).

If she DIDN'T pay her fair share of bills, then that is an issue. But since she DID pay her share of bills (and more) then that completely removes the worry about them.