[Politics] Inheritance Tax

[dazzer6666]

I guess my argument has been beaten then, with Your Mum.

Sorry, didn’t realise it was an argument- just expressing a view

 

[Eeyore]

Sorry about your loss. Did you find it easy dealing with it all?
Reason for asking my dad passed away in a nursing home back in March, he was put into care by social services due to my mum whk is suffering with Dementia and they Believed he was to much for my mum, however mum was fighting this via the courtes as she Believed otherwise. To cut a long story short im still trying to sort out a bill from the council regarding his stay.
Now i dont have POA over my mum,social services are trying to organise me having Deputyship of her finances as she spends money left right and centre. She is under mental health due to her threats of taking her own life. I Honestly dont think she will be around this time next year. She has a house that is worth approx. £350k but wuth a life time mortgage of £90k. My thinking is should anything happen to my mum i dont want the house although it is left to me,can i sell it to my 2 children for the £90k. If anyone who also read this could help out with some advise thanks.


I know a solicitor would be needed but has anyone else been in this situation. Oh by the way im an only child. Thanks in advance.

A lifetime mortgage is a debt against the estate and has to be paid when a person passes away. Obviously it accrues interest each year.

When a person passes away the organisation is informed as a creditor as a figure of debt is needed. My father had one against his property. They asked for the money to be paid and I basically told them to get knotted. Once I had tied up the estate they would receive it as I didn't have the cash until the house was sold. They went away and only troubled me once in between.

The issue you talk about is selling a house to your kids well below market value. I'm guessing that there could be potential tax issues here.

So the best advice, as ever, is to speak to a solicitor.

 

[Colonel Mustard]

Single people living alone in 3 and 4 bed houses is not a good use of the existing housing stock, I grant you that inertia and accumulated possessions is a major reason for people not downsizing, but the ability to pass on more of your wealth to your kids is another, freeing up family homes for families should be encouraged, rather than discouraged.
I am certainly not claiming that this would fix the housing crisis, there are bigger factors, but this adds to it.

I hear this view often expressed and I can see why it might seem to make sense. But I just don’t understand the mechanics of it. I’ve become one of those annoying older folk, living in, I suppose, quite a big 'family home', with my wife. If we decided to sell up and downsize, what happens to our house? It gets sold to some other (relatively) wealthy older couple or a young affluent family where both parents have well-paid jobs, or perhaps a stash of inherited cash. People in these categories can already afford to buy a nice house so us selling up isn’t going to help struggling young families. Unless there was very radical government who passed laws forcing oldies to sell their houses to young families at a quarter of their market value, I don’t see any way that a family who currently can’t afford to buy a biggish house could benefit from us downsizing.

One big problem is the lack of suitable housing to downsize to, even for people who want to. The demand for bungalows and smaller nice houses close to amenities, in the sort of place where people want to retire to, is phenomenal, and often not much cheaper than the bigger houses. It’s just not worth the hassle.

Not convinced personally. Would have to be an enormous incentive to get people to give up their long-term family home. None of the elderly people I know in houses bigger than they need want to leave, and saving their kids a bit of tax wouldn’t change their minds (including my mum).

I guess my argument has been beaten then, with Your Mum.

Dazzer's mum is a perfect example. People by and large, simply don’t want to move from the place they call home, and unless they’re forced to through ill-health or financial problems, tend not to do so. It’s frustrating, I know, but I just don’t see how you can force people to move. Perhaps Starmer is right, that the only way of dealing with this is a massive house-building programme, including some green field sites, and a weakening of the planning process. This would create other problems but it might be the only solution.

 

[Weststander]

A lifetime mortgage is a debt against the estate and has to be paid when a person passes away. Obviously it accrues interest each year.

When a person passes away the organisation is informed as a creditor as a figure of debt is needed. My father had one against his property. They asked for the money to be paid and I basically told them to get knotted. Once I had tied up the estate they would receive it as I didn't have the cash until the house was sold. They went away and only troubled me once in between.

The issue you talk about is selling a house to your kids well below market value. I'm guessing that there could be potential tax issues here.

So the best advice, as ever, is to speak to a solicitor.

Land Registry and HMRC share data. I've seen clients caught by that with second homes and BTL's, the IHT planning might work, but the parents are hit with a huge CGT bill.

 

[Creaky]

That’s incorrect.

As has been stated before, if you're a couple leaving your main residence to your children, they will only be taxed on that part over £1M and significant estates without any residential property are unusual. However all you ever see quoted is the £325K. The simple fact is that you have to be quite well off to pay significant Inheritance tax on your estate.

Just another example of the lies constantly told to the naïve and most vulnerable in Society to get them to vote against their interests yet again

The number of instances where IHT could be applied is likely to increase if you look at the fall in marriage/civil partnership numbers and the increased number of divorces where either one or both partners don't remarry.

The difference in IHT rules regarding property owned as "tenants in common" and that jointly owned should also be considered.

Having said that any estate that ends up paying IHT when there are so many ways of avoiding this is likely to remain very low.

 

[Eeyore]

Land Registry and HMRC share data. I've seen clients caught by that with second homes and BTL's, the IHT planning might work, but the parents are hit with a huge CGT bill.

Yeah. It's easy to make assumptions on these things. Solicitors know the score. I only spent about £1800 on mine as I did the leg work myself and left the legal stuff with them. But it saved money in the long run.

 

[WATFORD zero]

The major reason is people simply don’t want to move after being in a house for (probably) many, many years where they know their neighbours, the immediate area and have strong emotional ties to their home.

I agree it's a reason, but we are currently in that position having been in the same (or extended) house for 30+ years. We have a large family home and now that the kids have moved out for good (one boomeranged a bit), we have 3 spare bedrooms that are never used (except for someone occasionally 'staying over', or more likely, me getting drunk and snoring). We have a dining room that we even struggle to use at Xmas (we can seat 6 in the kitchen and probably haven't used the dining room more than four times in the last 3 years) and it all needs cleaning, maintaining and heating.

I want to move to something smaller, but Mrs Wz likes the house and where we are geographically (friends, gym etc). It's always a hard decision, but the current tax laws actually encourage us to stay in a large house half of which isn't used. If there is a housing crisis (and there is) it's not a great Government policy is it ?

And it's not just that I want to 'win' and move to somewhere smaller, but it would probably help a little

 

[jessiejames]

I feel for you - sounds a difficult situation.

Re your mum’s finances, I would see a solicitor - the MH issues potentially make it more complicated in terms of her altering her will (one way to have the property go straight to your children ?) and getting POA (we’ve already done this in the event one or both of us become incapable at some point - the earlier the better). The mortgage will need to be paid off or renegotiated from the estate before any distributions (including the property) can be made

A lifetime mortgage is a debt against the estate and has to be paid when a person passes away. Obviously it accrues interest each year.

When a person passes away the organisation is informed as a creditor as a figure of debt is needed. My father had one against his property. They asked for the money to be paid and I basically told them to get knotted. Once I had tied up the estate they would receive it as I didn't have the cash until the house was sold. They went away and only troubled me once in between.

The issue you talk about is selling a house to your kids well below market value. I'm guessing that there could be potential tax issues here.

So the best advice, as ever, is to speak to a solicitor.

Cheers for the answers. My mother is to far advanced with Dementia so her will is going to be no problem i hope as she can not change it, however i can not do anything about POA. it looks like the main problem i will have is selling house under market value to my 2 children. It should work in a way they pay off the life time mortgage say £100k between them, that should still give them near on £250k Equity on the house.

 

[dazzer6666]

I agree it's a reason, but we are currently in that position having been in the same (or extended) house for 30+ years. We have a large family home and now that the kids have moved out for good (one boomeranged a bit), we have 3 spare bedrooms that are never used (except for someone occasionally 'staying over', or more likely, me getting drunk and snoring). We have a dining room that we even struggle to use at Xmas (we can seat 6 in the kitchen and probably haven't used the dining room more than four times in the last 3 years) and it all needs cleaning, maintaining and heating.

I want to move to something smaller, but Mrs Wz likes the house and where we are geographically (friends, gym etc). It's always a hard decision, but the current tax laws actually encourage us to stay in a large house half of which isn't used. If there is a housing crisis (and there is) it's not a great Government policy is it ?

And it's not just that I want to 'win' and move to somewhere smaller, but it would probably help a little

We’re very similar…….been here 26 years. Our close has about 35 houses (all are 4 bed detached or extended beyond that) - I reckon no more than maybe 5/6 have changed hands since we’ve been here, and two of those were within a couple of years of us arriving (and one other was bought by the daughter of one of the others in the road who now has her own family but used to babysit for us !). Instead of a close full of youngish families as it mostly was when we moved in, it’s now one of long-retired empty nesters, people with kids at Uni or (like my next door neighbour who is 91 and lived here since about 1979) elderly people living on their own. You wouldn’t be able to drag him to a bungalow elsewhere. Point I was making is that IHT has very, very little to do with why we’re all still here, and any incentive to get us to move would be so expensive as to be counter-productive.

 

[dazzer6666]

Cheers for the answers. My mother is to far advanced with Dementia so her will is going to be no problem i hope as she can not change it, however i can not do anything about POA. it looks like the main problem i will have is selling house under market value to my 2 children. It should work in a way they pay off the life time mortgage say £100k between them, that should still give them near on £250k Equity on the house.

I don’t know about selling the property under market value (probably not wise, bound to be some rules around it) but if the house is sold, the first thing that will happen is the mortgage would be repaid, with the balance then going to the estate for distribution in accordance with the will. If it’s been left to you, you are able to gift it onwards but will need a solicitor to talk you through the mechanics. If they want to keep the property they can pay the mortgage off (if necessary by taking out a new mortgage).

 

[WATFORD zero]

We’re very similar…….been here 26 years. Our close has about 35 houses (all are 4 bed detached or extended beyond that) - I reckon no more than maybe 5/6 have changed hands since we’ve been here, and two of those were within a couple of years of us arriving (and one other was bought by the daughter of one of the others in the road who now has her own family but used to babysit for us !). Instead of a close full of youngish families as it mostly was when we moved in, it’s now one of long-retired empty nesters, people with kids at Uni or (like my next door neighbour who is 91 and lived here since about 1979) elderly people living on their own. You wouldn’t be able to drag him to a bungalow elsewhere. Point I was making is that IHT has very, very little to do with why we’re all still here, and any incentive to get us to move would be so expensive as to be counter-productive.

Very similar with the 12 in our close being full of old gits now and the last newbee arriving 7 years ago, only 2 kids in the whole close.

I was specifically talking about RNRB which actively encourages you to stay in larger (or more expensive) houses whilst there is an ongoing housing crisis. I figure that my kids will inherit a bit more than the £25 I got in premium bonds, so when they have to pay a few quid in tax, they're really not going to get a whole lot of sympathy from me, and they know this.

It's ongoing fun with my daughter as I tell her she is going to get my classic sports car and her brother is getting my vintage instrument collection whilst the rest is going to the cat's home. It's at that point that she explains she's the one responsible for booking my nursing home

 

[dazzer6666]

Very similar with the 12 in our close being full of old gits now and the last newbee arriving 7 years ago, only 2 kids in the whole close.

I was specifically talking about RNRB which actively encourages you to stay in larger (or more expensive) houses whilst there is an ongoing housing crisis. I figure that my kids will inherit a bit more than the £25 I got in premium bonds, so when they have to pay a few quid in tax, they're really not going to get a whole lot of sympathy from me, and they know this.

It's ongoing fun with my daughter as I tell her she is going to get my classic sports car and her brother is getting my vintage instrument collection whilst the rest is going to the cat's home. It's at that point that she explains she's the one responsible for booking my nursing home

Well, our eldest is a nurse, so unless she looks after us she’s getting **** all

 

[jessiejames]

I don’t know about selling the property under market value (probably not wise, bound to be some rules around it) but if the house is sold, the first thing that will happen is the mortgage would be repaid, with the balance then going to the estate for distribution in accordance with the will. If it’s been left to you, you are able to gift it onwards but will need a solicitor to talk you through the mechanics. If they want to keep the property they can pay the mortgage off (if necessary by taking out a new mortgage).

I think that might be the best thing to do.

 

[WATFORD zero]

I think that might be the best thing to do.

Definitely get a solicitor. You may even be able to get a recommendation off NSC

 

[dejavuatbtn]

A lifetime mortgage is a debt against the estate and has to be paid when a person passes away. Obviously it accrues interest each year.

When a person passes away the organisation is informed as a creditor as a figure of debt is needed. My father had one against his property. They asked for the money to be paid and I basically told them to get knotted. Once I had tied up the estate they would receive it as I didn't have the cash until the house was sold. They went away and only troubled me once in between.

The issue you talk about is selling a house to your kids well below market value. I'm guessing that there could be potential tax issues here.

So the best advice, as ever, is to speak to a solicitor.

Seem to recall I had 12 months to settle the mortgage when I had to sell my step dad’s flat when he went into care. I believe it would have been similar on death. Main issue on death I s that IHT has to be paid first which is a bit of a pain.
agreed that advice is required if selling under market value - the inland revenue would chase for the difference if they find out. I am pretty sure that the land registry and IR have their hands in each other’s pockets.

 

[LamieRobertson]

Very similar with the 12 in our close being full of old gits now and the last newbee arriving 7 years ago, only 2 kids in the whole close.

I was specifically talking about RNRB which actively encourages you to stay in larger (or more expensive) houses whilst there is an ongoing housing crisis. I figure that my kids will inherit a bit more than the £25 I got in premium bonds, so when they have to pay a few quid in tax, they're really not going to get a whole lot of sympathy from me, and they know this.

It's ongoing fun with my daughter as I tell her she is going to get my classic sports car and her brother is getting my vintage instrument collection whilst the rest is going to the cat's home. It's at that point that she explains she's the one responsible for booking my cats home

You’ve made a mistake there..but ive corrected it for you…just helping you with your pronouns

 

[dazzer6666]

Seem to recall I had 12 months to settle the mortgage when I had to sell my step dad’s flat when he went into care. I believe it would have been similar on death. Main issue on death I s that IHT has to be paid first which is a bit of a pain.
agreed that advice is required if selling under market value - the inland revenue would chase for the difference if they find out. I am pretty sure that the land registry and IR have their hands in each other’s pockets.

Plenty of providers offer IHT loans if the estate is asset-rich but cash-poor and the bill needs to be paid if anyone gets stuck in this situation.

 

[Eeyore]

Seem to recall I had 12 months to settle the mortgage when I had to sell my step dad’s flat when he went into care. I believe it would have been similar on death. Main issue on death I s that IHT has to be paid first which is a bit of a pain.
agreed that advice is required if selling under market value - the inland revenue would chase for the difference if they find out. I am pretty sure that the land registry and IR have their hands in each other’s pockets.

I don't think they offered me 12 months, but I wasn't bothered. If they had taken me to court a judge would have laughed at them. I think I was quite stern when I spoke to them. It was basically a formal way of telling them that they would get their money once the house was sold and they could bugger off till then. I didn't want to sell the house but my brother had a half share and there were other debts. I did put strict conditions on who it was sold to though. Had to be a family, no developers. I still miss it. Family home for 52 years. I lived there for the 6 months it took to sell it though which meant a lot.

 

[Thunder Bolt]

 

[Machiavelli]

I agree it's a reason, but we are currently in that position having been in the same (or extended) house for 30+ years. We have a large family home a nd now that the kids have moved out for good (one boomeranged a bit), we have 3 spare bedrooms that are never used (except for someone occasionally 'staying over',or more likely, me getting drunk and snoring). We have a dining room that we even struggle to use at Xmas (we can seat 6 in the kitchen and probably haven't used the dining room more than four times in the last 3 years) and it all needs cleaning, maintaining and heating.

I want to move to something smaller, but Mrs Wz likes the house and where we are geographically (friends, gym etc). It's always a hard decision, but the current tax laws actually encourage us to stay in a large house half of which isn't used. If there is a housing crisis (and there is) it's not a great Government policy is it ?

And it's not just that I want to 'win' and move to somewhere smaller, but it would probably help a little

You sound like the Mrs. Although alcohol isn't always necessary.*

*and we don't have a spare bedroom (too busy working in them).