Passing on the family home
Wondering if anyone knows this.
Grandparents, parents and children live in the same house (whose value exceeds the inheritance tax threshold).
Grandparents die, house passes to parents who continue to live in the house as their only residence.
Parents die, house passes to children who continue to live in the house as their only residence.
Etc.
Is inheritance tax due? The house remains the only residence and only owned property.
Grandparents, parents and children live in the same house (whose value exceeds the inheritance tax threshold).
Grandparents die, house passes to parents who continue to live in the house as their only residence.
Parents die, house passes to children who continue to live in the house as their only residence.
Etc.
Is inheritance tax due? The house remains the only residence and only owned property.
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Comments
Note when one grandparent dies then their allowance is passed to other grandparent if they are still alive but tax will be payable, if its worth more than combined allowance then guess what, you'll be paying tax again when second grandparent dies.
Same situation when it passes to children. So you might want to consider going straight from grandparent to child. However make sure everyone has sought legal advise to stop the children kicking the parents out and potentially other tax liabilities,
http://www.telegraph.co.uk/finance/personalfinance/tax/10664846/Can-I-pass-my-properties-to-my-children-and-cut-my-tax-bill.html
However, simply passing ownership on to the next generation isn't necessarily the solution, as the parents or children may die before the grandparents.
Becoming tenants in common is one way to help manage issues of inheritance tax, as well as trusts etc
A specialist solicitor would be your best bet.
Not if you want to continue to use it. Because if you continue to live there the taxman will know its not a genuine gift but attempted tax fraud.
You could skip a generation to avoid 2 sets of tax if you trust the grandkids or put the house in everyone's name - but you would risk one of them deciding to force a sale if there is a falling out later.
Example- I don't know what the thresh hold is but say a house worth £1 million in London, been a family home for generations. Normal people living there.(not super rich)
Parents pass and the house is left to there children who are 15& 17.
If they have cash asserts they could gift them though, without risking the taxmans wrath and continue all to live in the same property.
If you cant pay it, you have to take out a mortgage/loan or sell the house.
It's 40% of everything over £325k. So for a million it would be £270k tax bill. Still a nice windfall of over £300k each for the kids so I won't be shedding any tears for them.
Why's it unfair. You get a £1m house for £135k each. And no bank in the world would refuse that mortgage. If they wanted to keep the place they would just have to rent it for a few years and that should subsidise them both and pay the mortgage.
If they wanted a clean break they'd get £365k each.
The same place as any other tax
Again, what does the tax go towards?
Also is the tax on the whole estate? Or on how much you inherit.
Say you were to get £100k out if a £1 million estate, would you have to pay the tax?
It's effectively an income, that you have not worked for or paid tax on. You parents/anyone else paying tax isn't relevant.
I'll never be in this position thankfully, but it's not right IMO.
You're not being stupid; it's your opinion and you are entitled to have it.
I would ask you if you would feel the same if a friend or another family member, rather than a parent left you their house?
However, there are ways to avoid this tax.
I don't think it's fair either.
No I wouldn't feel different about it. If say I left you all my worldly goods which totalled over the thresh hold, I'd want you to have them. I wouldn't want to put you in the position of having to get a mortgage or put you in financial struggle.
I didn't leave it to the tax man, I left it to you
Anything under that your not gonna pay IHT
Yes, currently it is £325k.
Info here. (this link includes gifts etc)
Oh, I thought that was an example amount, I've not seen that amount anywhere else. Not saying it isn't though.
I'm on my phone so not sure if I've managed to add a link. However the government website is the first site that comes up when you google "inheritance tax threshold"
There's been talk of the threshold raising to £1million with the next budget