thom1980 Posted December 8, 2013 Share Posted December 8, 2013 Hi My parents are wanting to send me and my wife a sizable lump sum for house deposit. For arguments sake, £100k. my dad in the uk was advised by his accountant to come on the property with us so if he was to pass away in the next 7 years, we would not be hit for a large inheritance tax bill and the property would just pass to us. This also safeguards my dad's money and me, should anything happen between me and my wife, god forbid. although the Foreign Investment Review Board will allow this, but lenders won't seem to give me and my wife a mortgage with my dad on it too, even though on our own we can get a decent mortgage. does anyone know how to do this or alternatively, if the money was gifted or loaned to me in Aus from the Uk, would we have to still pay inheritance tax should anything happen to him in next 7 years. thanks Link to comment Share on other sites More sharing options...
Gbye grey sky Posted December 9, 2013 Share Posted December 9, 2013 This just sounds like a bad idea to me. Surely in the future when you moved and sold the house your dad might be liable to CGT if the house had increased in value and you may have to calculate him a share of the next house too. Anyway surely his share of the house would form part of his estate if he died within 7 years and would attract IHT anyway. Maybe this accountant knows his stuff but I thought IHT was tougher to avoid than this. Link to comment Share on other sites More sharing options...
thom1980 Posted December 9, 2013 Author Share Posted December 9, 2013 If my dad was on the deeds and he passes it is not made up as part of his estate. It simply transfers to the remaining owners if held jointly. If solely in his name then it would be part of his estate. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted December 9, 2013 Share Posted December 9, 2013 If my dad was on the deeds and he passes it is not made up as part of his estate. It simply transfers to the remaining owners if held jointly. If solely in his name then it would be part of his estate. I still think that this contribution would be classed as a gift if his share of the house was not part of his estate. Otherwise parents could do this routinely and dodge the gifts rules. There is also the CGT issue I referred to. Link to comment Share on other sites More sharing options...
Alan Collett Posted December 9, 2013 Share Posted December 9, 2013 Not sure I follow this. You are saying that your father's one-third interest would not form part of his estate if he dies within 7 years of you buying the property? What IHT exemption is this please? Some bedtime reading ... https://www.gov.uk/inheritance-tax/inheritance-tax-planning-passing-on-property Best regards. Link to comment Share on other sites More sharing options...
NickyNook Posted December 9, 2013 Share Posted December 9, 2013 If you have a Joint Tenancy arrangement with your father (not a tenants-in-common) then you're correct in that his share will pass to you automatically and is not counted as part of his estate BUT the value of his share will still be counted in the calculation of Inheritance Tax. http://www.nidirect.gov.uk/dealing-with-a-deceased-persons-money-and-property Link to comment Share on other sites More sharing options...
Rupert Posted December 9, 2013 Share Posted December 9, 2013 I can't see any difference in inheritance tax treatment whether he gifts you money or another asset like a share in a house. Your accountant is talking rubbish. Keep it simple and leave your dad off the house deeds. Link to comment Share on other sites More sharing options...
Alan Collett Posted December 9, 2013 Share Posted December 9, 2013 Hi NickyNook: ... his share will pass to you automatically and is not counted as part of his estate BUT the value of his share will still be counted in the calculation of Inheritance Tax => I think this is confusing - or contradictory. Whether the interest in the property is held as tenants in common or as a common tenancy the property interest is (so far as I recall) part of the deceased's estate, and attracts IHT. => To mitigate IHT the father should gift the capital now, and not reserve a benefit. It will most probably be a Potentially Exempt Transfer, and so long as he survives for at least 3 years not all of the gift will attract IHT. Once he has survived 7 years from the date of making the gift the entirety of it will be outside the charge to IHT: http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/gifts.htm#4 Best regards. Link to comment Share on other sites More sharing options...
NickyNook Posted December 10, 2013 Share Posted December 10, 2013 Hi NickyNook: ... his share will pass to you automatically and is not counted as part of his estate BUT the value of his share will still be counted in the calculation of Inheritance Tax => I think this is confusing - or contradictory. Whether the interest in the property is held as tenants in common or as a common tenancy the property interest is (so far as I recall) part of the deceased's estate, and attracts IHT. Best regards. I was just paraphrasing from my UK link http://www.nidirect.gov.uk/dealing-with-a-deceased-persons-money-and-property which said: 'If the deceased person owned property with another person or persons as 'beneficial joint tenants', the deceased person's share automatically passes to the surviving joint owner(s). Property owned as joint tenants does not form part of a deceased person's estate on death. But the value of the deceased person's share of jointly owned property is included when calculating the value of the estate for Inheritance Tax purposes.' Maybe they just put it badly.:biggrin: Link to comment Share on other sites More sharing options...
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