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    • Keep pedalling
    • By Keep pedalling 15th Apr 18, 10:16 AM
    • 5,289 Posts
    • 5,910 Thanks
    Keep pedalling
    You should also talk the your GCs parents, they are the ones who would be lumbered with a property trust to deal with (unless you appointed expensive professionals) should you die before either child reaches 18.
    • Cardew
    • By Cardew 18th Apr 18, 7:09 PM
    • 27,423 Posts
    • 13,434 Thanks
    Cardew
    The latest updated version of the IHT article(April 2018) is incorrect. It states:

    In the 2018/19 tax year, everyone is allowed to leave an estate valued at up to £325,000 plus the new 'main residence' band of £100,000 giving a total allowance of £425,000.
    So for example, if you leave behind assets worth £500,000 (assuming you have just one property), your estate pays nothing on the first £425,000, and 40% on the remaining £75,000 - a total of £30,000 in tax - if you're not leaving anything to charity.
    It should read for the 2018/19 tax year the new 'main residence' band is £125,000 giving a total allowance of £450,000. etc etc

    How do you contact MSE to get them to correct the article?
    Last edited by Cardew; 18-04-2018 at 7:11 PM.
    • Savvy_Sue
    • By Savvy_Sue 18th Apr 18, 7:58 PM
    • 38,892 Posts
    • 35,721 Thanks
    Savvy_Sue
    The latest updated version of the IHT article(April 2018) is incorrect. It states:

    It should read for the 2018/19 tax year the new 'main residence' band is £125,000 giving a total allowance of £450,000. etc etc

    How do you contact MSE to get them to correct the article?
    Originally posted by Cardew
    You can either click on the Report button of your post and explain you'd like them to correct their article, or you can email forumteam@moneysavingexpert.com and ask them.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats 2 balaclavas for seamen, 1 balaclava for myself ...
    Current projects: Poppies, mohair cardigan pattern arrived and going strong!
    • mellizo
    • By mellizo 18th May 18, 3:49 PM
    • 7 Posts
    • 1 Thanks
    mellizo
    My grannie (82) has owned one building in NW London for over 20 years, and so by now she has been trapped by the London housing bubble and a potentially huge IHT bill.
    Those are the facts we are dealing with:
    - The property is a terraced house, which is divided into TWO properties, one in the basement, and another in the upper floors.
    - My grandmother lives in the basement floor. It has been her main residence since she moved in with her late husband. She owns the freehold.
    - The upper floor is now occupied by my brother, rent free.
    - Several estate agencies have evaluated the property, and said that the “asking price” for sale will be around 1.450.000 pounds…. BUT
    - The property is in bad shape and a Chartered Surveyor has told us that there is “possible subsidence” and “possible wet rafters”, among many other small problems, so I believe that in case of a valuation for transfer or IHT purposes , the final amount will be much less, around a million or so.
    - My mother is the only inheritor, as there are no other siblings.
    The plan is for my grandmother to transfer her dwelling to my mother, as a potentially exempt transfer. As my grandmother will be giving her main residence to her only child, there will be no CGT, nor Stamp Duty to pay. Is it true? As we understand, this step won’t cost any money on taxes but some paperwork and legal expenses. Are we wrong?
    My mother (who lives in Spain) will then reform the basement and rent the apartment. Will She be obliged to declare that property to the Spanish authorities for tax purposes?
    We know that the rent´s Income Tax will only be paid to the HMRC, but are clueless about the property.
    Meanwhile, my grandmother will move to the upper floor, which will be declared as her main dwelling. If everything goes fine, the next movement will be to transfer the upper apartment again after 7 years or before if the valuation we get about the TWO properties goes below the Nil Rate Band allowance.
    As we believe, we have an Ace in the Nil Rate Band allowance my grandmother estate is entitled, even if she passes away before the notorious 7 years are over.
    We assume that the Nil Rate Band in her case of will be of at least 325.000 + 125.000 pounds, but we can also add up my grandfather`s allowance , who passed away in 2004 and who left all of his estate (the house) to his wife. So another 450.000 might be added up, to a very nice amount of 900.000 pounds. Is that so?

    Do you think this is feasible, or just and elaborate and wishful fantasy? If It is possible, how much do you think it will cost in taxes, paperwork and legal counsel?
    • Keep pedalling
    • By Keep pedalling 18th May 18, 6:26 PM
    • 5,289 Posts
    • 5,910 Thanks
    Keep pedalling
    First off your GM will never be hit by an IHT bill her estate will. If she survives another 2 years then the combined nil rate and residence nil rate band will add up to £1M

    If the building needs work doing to it, then a better plan would be to sell the basement, move into the upper floors and spend some of the proceeds in getting the house sorted, and setting up an emergency cash fund if she does not have one. Anything over that can be gifted as part of reducing any future IHT bill.

    Under no circumstances should she gift the whole property away if this leaves her with no other substantial assets that may be needed to give her a comfortable old age.

    She should also consider who her estate goes to. If everything is left to your mother then she might be passing on an IHT for her.
    • Cardew
    • By Cardew 18th May 18, 6:30 PM
    • 27,423 Posts
    • 13,434 Thanks
    Cardew

    Do you think this is feasible, or just and elaborate and wishful fantasy? If It is possible, how much do you think it will cost in taxes, paperwork and legal counsel?
    Originally posted by mellizo

    There are far better qualified people on here than I, but here are my thoughts.


    1. Your grandmother cannot gift the house to your mother and continue to live in the property. It is a 'gift with reservation' and will not be a potentially exempt transfer.



    2. Provided the house is left to your mother she will benefit from the £900k ceiling, rising to £1million in 2020. That is assuming your grandfather didn't use any of his nil rate band.



    3. Your mother not living in the house, and renting it will be liable for capital gains tax.


    4. As there are two houses in the building, surely the second property is liable for CGT. It is no different to owning a second house in another part of London.


    5. I wonder how HMRC would view your brother living rent free in a second house. Might it be assessed for a notional income and thus use up her IHT nil rate band.


    Just my thoughts!
    Last edited by Cardew; 18-05-2018 at 6:58 PM.
    • manrow
    • By manrow 21st May 18, 4:53 PM
    • 181 Posts
    • 22 Thanks
    manrow
    We are considering taking out a Family Protection Trust. In the brochure it suggests that this will include protection against IHT, preparing Wills and updating them from time to time, as well as completing Powers of Attorney for both of us.
    As you might imagine there is a one-off capital sum to pay for thess legal services, where the national firm of solicitors will also be Trustees, although all decisions will be made by the family trustees.

    Sounds inviting, anyone any experience of these schemes or are they a scam?
    Be ALERT - The world needs more LERTS
    • johngolfuk
    • By johngolfuk 26th Jul 18, 4:19 PM
    • 1 Posts
    • 0 Thanks
    johngolfuk
    Hi,

    First post on MSE....

    I'd like clarification please on the main residence threshold.

    Dad died in May 2016 (ie before the introduction of the main residence threshold) and left everything to Mum.

    If she dies, is the tax free allowance £325K x 2 + £125K for the main residence allowance? So £775K?

    Or, does dad also qualify for the main residence allowance making the total tax free allowance £900K?

    Many thanks

    John
    • AlwaysLearnin
    • By AlwaysLearnin 26th Jul 18, 8:26 PM
    • 585 Posts
    • 494 Thanks
    AlwaysLearnin
    There are various conditions, but if the position is pretty straight forward then your dad's allowance would probably be transferable if required.

    See:

    https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold
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