Inheritance Tax

Daff57

Hi there

Would really appreciate help with a couple of questions about inheritance tax and planning please.

If a remaining elderly parent sells their property to move in with their child and family and contributes a large sum towards the new house purchase for them all, what could the repercussions be down the line? Is it better listed as an 'investment' or 'gifted, should the parent want to protect that money for thair actual child to inherit in latter years and how it affects IT? Can this just be done as a 'Declaration Of Trust' document or would the deeds need to be altered?

Also if it was listed as a gift at the time of purchase and then changed to an investment can this cause problems renewing a mortgage?

Any advice gratefully received please. Many Thanks

Keep_pedalling

First off selling their home and moving in with their children will not impact the residential NRB which can still be claimed under the downsizing rule.

Gifting money to extend the house will be treated as a gift with reservation of benefit so for IHT purposes will not fall out of their estate under the seven year rule.

The other considerations would be the risk of deliberate deprivation of assets should she need residential care in the future and if she has other children the potential for siblings fighting over a reduced inheritance.

What is the value of their current home? How much of that would be being put in the child’s home?

mta999

"should she need residential care in the future "

…..should she need MEANS TESTED residential care in the future 

Daff57

Thankyou so much for your help. The current value of their home is £625,000, then £250,000 of that would go towards new family home.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81962578#Comment_81962578

Then she would not be depriving herself of the means to pay for any are costs that maybe needed in the future.