IHT on Property

Tila_2

Hi

My Mother owns our house worth approx £400000 and would like to leve this to us 3 kids. Whats the best way to do this so as to avoid IHT?

She will obviously be living there too.


Help please?

localhero

Is your mother a widow? If she is she may (depending on what her husband did with his estate) be entitled to double up on the nil rate band.

If she isn't then her net estate (assets less liabilities) must not exceed £312,000 (under the current rules) otherwise the estate will face an IHT liability.

Do any of her children live in the property? Because if they do, then an option is to make a gift of a part of the property to them now and hope to survive 7 years.

If the answer to that is no, then she could sell the property and buy something smaller and make a gift to the children now (and again hope to survive 7 years) alternatively borrow against it and give that away.

Unfortunately with a property that's worth in excess of the nil rate band there aren't always easy options.

Tila_2

Hi

Thanks for the reply, yes she is a widow and when father passed away the house became mom's. Wasnt realy any other estate as such.

2 of the kids do still live there. Can you advise how the gift works and the 7 years? Will that avoid the IHT too?

Thanks again for ur help.

localhero

In that case your mother doesn't need to worry about making gifts to reduce the value of her estate.

For, since October last year, married couples can 'uplift' the unused nil rate band of the first spouse to die.

Therefore if your dad's estate (ie his share of the house) passed to your mother, then he would have a 100% unused nil rate band.

So in short, your mother can leave an estate of £312,000 x 2 without incurring inheritance tax. :T