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IHT implications Single parents/Joint Tenants

My mother is a widow (my father died in mid-1980s) and owns a property worth £1.2M (in London). Many years ago (late 1980's) my brother and I were made joint tenants of the property. My mother has been living in the property on her own since my father died, using a couple of rooms in the property to run a business (letting holiday flats).

In the past she has paid us "rent" on the advice of a solicitor, once a year (not completely consistently every year) but perhaps not at the correct market value - she has just made a rough guesstimate.

Please can you advise in broad terms what we would be liable in terms of inheritance tax and CGT on the death of my mother. We would probably intend to rent out the house rather than sell it after that, so we would also need to know if CGT would be liable only if we sold the house. Also if there is anything we can do to minimise the IHT/CGT we would be grateful to know. If anyone knows a good financial adviser/solicitor to help us, we would also be grateful!

Comments

  • Since your mother does not own the house there will be no inheritance tax associated with the house.

    There will be about £275,000 i.e. The nil rate band for which no tax is paid.

    The house itself appears not to be your principal residence so i expect you will have to pay Capital Gains Tax on it.

    The house will probably have appreciated by more than £1,000,000
    since 1980 i.e. It probably was worth less than £200,000 in 1980

    Hence the tax could be in the region of £400,000 in total.

    As this is a significant amount then professional advice might actually be worth what you have to pay for it.
    ...............................I have put my clock back....... Kcolc ym
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