Inheritance tax
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ImranQ
Posts: 177 Forumite
in Cutting tax
I have a few simple questions regarding gifts and inheritance tax. My mother and father put me on their property as a joint owner just under seven years ago. It will be a total seven years on 11 November 2018. I believe the seven year inheritance tax gift rule is applicable.
Shortly after the transferral, my father had an accident which resulted in a brain injury and then a health decline with dementia. To cut a long story short, he is in a precarious state at the moment sometimes up and sometimes down.
Questions:
I assume that at the end I will be a joint owner with 1/3 ownership on that date?
Am I right in assuming that if God forbid my father dies before the seven year period is up, will the property automatically transfer to my mother and the seven year gift rule continues to completion to 11 November assuming my mother remains alive?
At that point the 1/3 will transfer to me?
Shortly after the transferral, my father had an accident which resulted in a brain injury and then a health decline with dementia. To cut a long story short, he is in a precarious state at the moment sometimes up and sometimes down.
Questions:
I assume that at the end I will be a joint owner with 1/3 ownership on that date?
Am I right in assuming that if God forbid my father dies before the seven year period is up, will the property automatically transfer to my mother and the seven year gift rule continues to completion to 11 November assuming my mother remains alive?
At that point the 1/3 will transfer to me?
0
Comments
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You are a joint owner with (presumably) 1/3 ownership now.
If the house really is in "Joint ownership" you all own the property so if your father dies both you and your mother will own the property, presumably 1/2 each.
However if it was held as "tenants in common" that would mean that you each separately own 1/3 (or some other fraction) of the house so if your father dies his will should state what happens to his 1/3.0 -
Did your parents remain in the house after the gift?
Do you also live in the house?0 -
You are a joint owner with (presumably) 1/3 ownership now.
If the house really is in "Joint ownership" you all own the property so if your father dies both you and your mother will own the property, presumably 1/2 each.
However if it was held as "tenants in common" that would mean that you each separately own 1/3 (or some other fraction) of the house so if your father dies his will should state what happens to his 1/3.
Thanks for your reply.
The house was transferred using the Land Registry form TR1 by the solicitor.
I know I am currently 1/3 owner but my question is with regards to gifts as the transfer I believe counts as a gift. Therefore as far as I know the 7 year rule with regards to gifts & inheritance applies. I wanted to know what the rules would be should my father die before the 7 years were up and how it affects my mother.
After my father's death his will comes in force but I am not concerned about that at this stage.0 -
I have always lived in the house with my parents before and after the transfer.
[FONT=Verdana, sans-serif]Then you own 1/3rd and always will do. If your father dies within 7 years of the gift then his gift will use up some, or all, of his £325k nil rate IHT band, leaving less to transfer to your mother.[/FONT]
[FONT=Verdana, sans-serif]I assume the gift was from both parents so your father's gift, for IHT purposes, was 1/6th of the property not 1/3rd.[/FONT]0 -
[FONT=Verdana, sans-serif]Then you own 1/3rd and always will do. If your father dies within 7 years of the gift then his gift will use up some, or all, of his £325k nil rate IHT band, leaving less to transfer to your mother.[/FONT]
[FONT=Verdana, sans-serif]I assume the gift was from both parents so your father's gift, for IHT purposes, was 1/6th of the property not 1/3rd.[/FONT]
Thanks for your reply.
The property was originally jointly in both my father's and mother's name. So, I guess it would be done at 1/6th each?
My original question was essentially, if he dies before the 7 years are up do I get an IHT bill from the taxman ?0 -
Thanks for your reply.
The property was originally jointly in both my father's and mother's name. So, I guess it would be done at 1/6th each?
My original question was essentially, if he dies before the 7 years are up do I get an IHT bill from the taxman ?
You wouldnt get a bill provided the estate could afford to pay the taxes. The value of the gift would be added to that of the rest of the estate and any taxes due would be paid by the estate prior to distribution to the beneficiaries. Of course there could well be no taxes due anyway.0 -
You always lived with your parents and shared the bills with them?
https://www.gov.uk/inheritance-tax/passing-on-home
See above under
Giving away a home before you die0 -
Are you aware of both the main nil rate band and the primary residence nil rate band? Unless your parents joint estates are over £900k it is unlikely any IHT would be due.0
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Sounds like a GROB to me (and has deprivation of assets problems too if relevant). The 7 year rule is not in play unless your parents paid you a full market rent.0
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