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House inheritance

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Can anyone advise what would happen in regards to inheritance tax (or not) in this scenario: I inherit my parents home after they pass away. It is worth over £400k I do not have lots of money saved… Read More
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2m, 2w agoPosted 2 months, 2 weeks ago
Can anyone advise what would happen in regards to inheritance tax (or not) in this scenario:
I inherit my parents home after they pass away.
It is worth over £400k
I do not have lots of money saved in the bank
I intend to live in that house
I do not wish to sell it.
It has been in the family for generations.

Would I have to pay an amount of inheritance tax?
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2m, 2w agoPosted 2 months, 2 weeks ago
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#2
I have recently been through similar to this.

If your parents are married on the passing of the 2nd parent you can apply for their inheritance tax allowance to be transferred to their estate which essentially doubles the IHT NIL rate band so you will likely be under the nil rate band (assuming there are not a great deal of other assets) and won't have any inheritance tax to pay.

When the 2nd parent passes you will likely need to go through probate which will give you a 'grant of probate' which the executor can then apply for the property land registry to be changed into your name (assuming that's the wishes of your parents wills), solicitors can help with this, when we did it quotes varied substantially or you could tackle it yourself there are quite a lot of guides on line to help do this.

If your parents don't have wills yet, I'd strongly recommend getting them to as this will make the whole process a lot easier for you.

I hope this helps
#3
They can also gift the house to you now along as as they live for 7 years after gift IHT not liable.
#4
ANDYwwww987
They can also gift the house to you now along as as they live for 7 years after gift IHT not liable.


If the house is gifted and the parents stay in the house this is classed as "a gift with reservation" and the parents will have to pay the son the market rent.
#5
ANDYwwww987
They can also gift the house to you now along as as they live for 7 years after gift IHT not liable.


wrong. 7 years only applies to money.
#6
r4rcm
ANDYwwww987
They can also gift the house to you now along as as they live for 7 years after gift IHT not liable.


If the house is gifted and the parents stay in the house this is classed as "a gift with reservation" and the parents will have to pay the son the market rent.


this is correct and you would be taxed on the income from the rent.
#7
A neighbour of mine has told me that he has put his house in trust for his adult daughter, for when he dies in order to reduce iht. I'm not really sure how this works, but maybe somebody else here can advise.
#8
cmncomp
ANDYwwww987
They can also gift the house to you now along as as they live for 7 years after gift IHT not liable.
wrong. 7 years only applies to money.

No Potentially Exempt Transfers do not just apply to cash. Speak to an accountant / solicitor and don't rely heavily on advice here
#9
Before the "doubling up" of the married IHT allowance, the other way was to split the house between the two parents (as "tenants in common"), so that half could be inherited on the first death.
#10
Depends on total amount of estate. If home is passed to children (including adopted, foster or stepchildren) or grandchildren, total tax-free threshold is £425,000.
https://www.gov.uk/inheritance-tax/passing-on-home
#11
Isn't it about time the government scrapped this awful tax completely. It's hard enough trying to deal with the death of your last parent without the government wanting their bit too. I recently underwent the probate process and did all the forms myself. The probate form is quite easy but the tax form, OMG. It's so complicated and like it's deliberately made so in order that you have to use a solicitor. Whilst I understand it's because they need to try and establish the wealth of the estate, in my case my dad was well below the threshold yet still have to go through the same process.

This tax is completely wrong. All of us who work pay income tax on our earnings. We pay vat on all goods we buy. We even pay bloody premium tax on our car and house insurance. This country is tax insane and what happens when we die, the government want a share of our wealth. In some respects it doesn't pay to save and buy a nice house and save our money for old age. Our intention when I retire will be to down size and invest in my children and grand children. I will ensure that our government does not get any tax from my estate by ensuring that I will be under the threshold.

I am sorry I can't help on the topic. My own experience was different but I feel that had inheritance tax been applicable in my dad's case I may have had to use a solicitor. One interesting point when reading the forms is the probate office will only give grant of probate when you pay them the amount of inheritance tax due. Not quite sure how people raise those funds when in most cases assets are usually tied up in property which can't be sold until grant of probate is received and you can't get probate until you pay the tax. I guess it's not an issue to the people who write our laws as they probably have money to burn but for many people their parents may have little cash irrespective of how much their house is worth. It all wrong and needs to be reformed.

Just something that my be useful. Rather than ask budding lawyers on here it may be the best course of action to just go and see a solicitor. They will know all the laws regarding probate, inheritance tax etc etc and for what they will charge may save you a fortune in the future. I have heard about tenants in common where you all own the house, so you each own 100% of it, not a third. Seek proper advice.


Edited By: Smartguy1 on May 08, 2017 20:36: Added

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