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22 Apr 21, 12:59 PM |
#21
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Imagineer
Join Date: Oct 09
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If the house is valued at £350k and its gifted by one parent only (ie not jointly owned), would £25k (ie the bit over the individual IHT allce) be immediately assessed at lifetime rates of IHT (20% i think) ?
Disney332
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22 Apr 21, 01:09 PM |
#22
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Stuck in the Tower of Terror
Join Date: Oct 07
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I'd definitely look at taking specialist advice. If your parents sell to you at less than market value and subsequently need residential care this could be viewed as a disposal of assets to avoid care home fees and could get messy.
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22 Apr 21, 01:21 PM |
#23
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Imagineer
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Deprivation of assets could also be an issue should one or both of your parents need care and weren’t able to self fund.
CGT is payable on the difference between the value of the property when inherited and the point of sale to you. Say it was worth £200k on inheritance and is worth £350k now, CGT could be around £35k. |
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22 Apr 21, 01:27 PM |
#24
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VIP Dibber
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The gift is either a potentially exempt transfer (PET) or a chargeable lifetime transfer (CLT). If it were a CLT then the answer to your question would be yes. However this looks like a PET to me, in which case no. A CLT usually involves transactions with trusts or companies (rather than individuals).
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22 Apr 21, 04:51 PM |
#25
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Thread Starter
Imagineer
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Thanks for all your advice, I really appreciate it.
It is a interest only mortgage, and either way the house will need to be sold in 2 years as they don't have the money to be able to pay it back. My dad is 75 and my Mom is 70 so I'm not sure their current mortgage company will extend the term again, but I may be wrong. It seems like a a minefield and its so difficult to find trustworthy advisors. I certainly don't want them to be out of pocket with paying tax if I buy it, so I'll need to think about that as well. I'm an only child so I don't have to think about Siblings. I'm not sure whether this will make any difference to the CGT but when my parents inherited it, it was a Dorma bungalow and was valued at around £250k my grandad's dream was always to make it into a house and that's what my Dad wanted to do with it and is why they took out the £150k mortgage. So in today's market, they've actually technically lost money renovating it - does this make any difference?
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Edited at 09:15 PM. |
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23 Apr 21, 08:46 AM |
#26
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Imagineer
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They can sell you the house for 2p if they want to.
Its the taxation that is the issue here. For stamp duty you would need to get it professionally valued and pay stamp duty on the deemed value not the price you pay. Equally for then Capital Gains Tax will be levied on the gain between the property value when inherited and the value when sold. |
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23 Apr 21, 01:52 PM |
#27
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Imagineer
Join Date: Feb 08
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Not sure on houses but does on shares that my Dh was given so another thing to look into - good luck🥴. If you are a first time buyer you should be ok for stamp duty - the government has a website you can check by entering the figures!
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Edited at 01:54 PM. |
23 Apr 21, 07:34 PM |
#28
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VIP Dibber
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23 Apr 21, 07:42 PM |
#29
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Imagineer
Join Date: May 10
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23 Apr 21, 07:42 PM |
#30
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Imagineer
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