Inheritence tax question

The true value of the house would be regarded as the actual gift (which is what it would be regarded as - albeit it was sold for 1) and the mother would have to live 7 years for it to be outside the IHT charge. Also, she would also have to pay a commercial rent for this to be effective. This sort of ruse was stopped years ago, even before Gordon Brown.

Rob Graham

Without wishing to be cruel, she won't be a full time carer when she inherits the house will she?

She can then get another job and a mortgage. This will only be

What's the problem?

tim

You are a broken record and I claim my £5.

In message , chas writes

Yet she would now own a house worth £372500.Not bad.

No. the best thing would be for her to make the daughter a joint owner. The mum would have to live another 7 years, but then (subject to the house not rising excessively in value) there would be no IHT bill.

Gift with reservation?

I'm wondering whether something could be done by way of her mum

On death, the value of the estate would be the value of the house (plus chattels and any savings) *minus* the value of the wages owed.

The daughter would then get part of the value of the estate by right of being owed these back wages, and she would only actually inherit what's left over. She'd still get it all, but partly in payment and partly by way of inheritance.

No. By making the daughter a joint owner, mum would be considered to have gifted half the house. Since the daughter would be living in the same house with mum, mum would not be "reserving" rights to te daughter's half, only to her own.

In message , GB writes

Not if both living in it.

Good idea, but wrong basis.

The daughter would appear to have established an equitable interest in the property and also established a tenancy. therefore, when mum dies, the value of the property is not the open market value with vacant possession but a property subject to a protected tenancy, or a property in which somebody else has an equitable interest. But will it work? hmm possibly...

What do you mean "wrong basis"? The paragraph with which you follow your comment does not justify that comment, it's merely another idea (but a jolly good one).

BTW, just how *do* you establish a protected tenancy (in the absence of a tenancy agreement), not to mention an equitable interest?

Does not money have to change hands in order for it to be a tenancy at all?

Robert

In message , Ronald Raygun writes

The principle is to reduce the value of the asset.

Its the absence of the written agreement that makes it protected if the tenant has been there long enough. and before you ask, I dont know how long!

She has the equitable interest on the basis of it being her family home for x years in which she has enjoyed the benefits as if it were her own.

Does it? Wouldn't payment in kind count? I suppose there's always "one pound and other consideration".

Not quite:

"...the parents occupational enjoyment of the part of the house that they have given away is in return for similar enjoyment of the children of the other part of the property. Thus the Donor's occupation is for a full consideration"

Nor does it make any difference what the relative proportions are, so halves or quarters apply equally.

Fair enough. In other words, the parents would not be reserving rights to the part they had given away. :-)

Where are you quoting from, by the way?

You are not worth £5.

It's impossible now, the default is an Assured Shorthold Tenancy. Best you can do now is create an Assured (not Shorthold) Tenancy. Written notice has to be served.

Before the advent of the Housing Act 1988 in February 1989.

Daytona

Thanks for all the replies - many of which are over my head - but interesting still to see just how someone could be left in financial problems simple because their mum died.

The daugher appeared to be in her 50s - at her age I doubt she would find 'well paid' work easily to pay off a large debt.

chas

Hansard.

http://64.233.183.104/search?qÊche:zR6WaOYKhCoJ: