OT - house inheritance

On Sat, 09 Mar 2013 21:58:34 +0000, The Natural Philosopher wrote:

The inheritance is tax paid so any CGT will be only be due (when selling) on anything positive from the "aquistion" price and the selling price. This might take quite a while in the current markets to get bigger than the CGT allowance... That's assuming this house doesn't become your primary residence as they are CGT excempt...

Everyone ought to be planning how to reduce the amount their estate has to pay to HMG, but many don't. What are you going to do with the house before you sell? Live in it, second home, rent it out, or just take stock and sell soon? Have you any kids? Might be worth passing it on to them if your estate(s) are already banging into IHT.

It can get complicated depending on what assets are already held and whose name(s) those assets are held by. "Tennants in Common" I think is the legal phrase, means that the property automaticly passes to the survivor without being part of the deceased estate but it does then become part of the survivors estate, which might not be the best thing if they have a significant estate of their own. Also there are legal definitions of who is decreed to have died first and thus how things shift if you are both die at the same time.

But not just any accountant, one specialising in personal tax is required and the solicitor needs to know about personal affairs, Wills, Lasting Power of Attorney, etc
It's not so much complicated as lots of gotchas that vary depending on circumstances.
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Cheers
Dave.
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On Sat, 09 Mar 2013 23:56:26 +0000, Dave Liquorice wrote:

'Tenants in Common' means that husband and wife each own (usually) 50 percent of the property, and that share forms part of their individual estates. Each can will that share to whoever they want.
'Joint Tenants' own the whole house between them, such that on the death of one of them the other automatically inherits without it becoming part of the deceased's estate.
If the object involves minimising CGT and IHT, then professional advice is a must. If the object is to let the property, that adds another layer. Given the value of the house, and the severity of the possible pitfalls, the cost is trivial.
--
Terry Fields

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On 10/03/2013 12:25, Terry Fields wrote:

...and the % ownership can be varied according to individual requirements; eg so if two individuals own a property they wish to sell, they may wish to make it 50% each to use both of their CGT allowances; whereas if they are letting the property out, and one of the owners has a higher tax liability than the other, then it may make sense to have the ownership proportions, say, 99%:1% (all other thing being equal, IANAL, etc etc)

To add to this: the land registry records which of the above two scenarios the property is held as. If the property is held as "tenants in common" the record doesn't include the % proportions, and these can be very simply varied by a deed, ie without having to go back to the Land Registry again. Useful in the scenario above eg where a jointly property is to be let out, and sold at a later date.
--
David

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Presumably some here have already asked one.
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On 09/03/2013 22:12 Rod Speed wrote:

Posts over the past several years show they have and that they know what they're talking about. Which is the reason why I said 'there's a wealth of relevant experience and expertise in here' and why I made the enquiry.
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F



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On Saturday, March 9, 2013 9:14:08 PM UTC, F wrote:

news:uk.legal.moderated
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You might consider moving in there & selling your existing house. Possible to avoid CGT altogether this way?
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On 09/03/2013 21:14, F wrote:

Are you intending to get divorced?
uk.legal.moderated is well worth checking.
Andy
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On 10/03/2013 10:10, Andy Champ wrote:

I would recommend professional help with this but NOT a solicitor but a financial advisor. Solicitors are rarely qualified for all aspects of tax although you will require one to draw up and legalise your solution.
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And even if you aren't, it worth allowing for that.
The shit has comprehensively hit the fan with two I have known for 40 years now, with an unexpected divorce.

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Thanks for the helpful suggestions: appreciated.
Just to bring things up-to-date, the house will probably be let, Management hasn't issued divorce papers (yet!), I've reposted to u.l.m and I'm seeing a solicitor tomorrow.
The reason for the questions was to give me a feeling for questions I might want answered by him and to check to see if I'd missed any options that might be better than the ones I'm considering.
As has been pointed out, in the present market CGT isn't likely to raise its very ugly head but I'm trying to cover as many eventualities as I can in one go.
--
F



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On 10/03/2013 13:58, F wrote:

The rental income will up somebody's tax liability I guess
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F wrote:

My experience has been that solicitors, even if they are tax savvy, usually avoid suggesting tax avoidance measures. A financial advisor - who will want a fee - is more likely to talk about the range of possibilities and then the solicitor will comment/advise on the risks associated with each.
Owning two properties are quite likely to take you and your wife over the IHT threshold on the second death. If you are letting it out, there could be less income tax arising from the rent, it is is in the name of the lowest tax payer. If the rent would take either of you into high rate tax, then it might be that equal ownership and splitting the taxable income equally could keep you both below the high rate threshold.
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On Sun, 10 Mar 2013 16:22:53 +0000, Bob Minchin

Unfortunately, I don't entirely agree. Whilst most solicitors lack the specialist tax knowledge, in my experience, most IFA's also do but won't admit it and try to exploit the client by offering a range of , potentially inapproriate, products/advice. I am sure that there are knowledgable IFAs, knowledgeable solicitors and knowledgeable accountants but finding them is not easy. Please reply to group - email address is not monitored Ian
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F wrote:

CGT is only levied on the amount the property increases in value between you acquiring it and selling it.
Bill
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On Mon, 11 Mar 2013 02:37:47 +0000, Bill Wright wrote:

It isn't as simple as that, which is why the OP needs professional, paid-for advice.
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Terry Fields

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On 11/03/2013 09:52 Terry Fields wrote:

Care to expand on that? I'm going to get paid-for advice but I find it's useful to know at least part of the correct answer in advance so I can judge the rest of it...
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F




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On Mon, 11 Mar 2013 10:26:55 +0000, F wrote:

I'm fairly sure that the 'starting year' and 'ending year' for CGT can be adjusted, depending on carried over/ carrying over allowances. It might not be the only relevant factor.
What is clear is that CGT isn't a straightforward x% of A - B; how you get to A and B is also important.
This is why I said upfront that paid-for professional advice is important.
Some reading...
http://www.hmrc.gov.uk/cgt/property/basics.htm
(basics)
http://www.taxcafe.co.uk/property-tax-guide.html
(scroll down to Capital Gains Tax).
HTH
--
Terry Fields

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People I know have paid good money for very bad advice
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On Mon, 11 Mar 2013 14:29:03 +0000, stuart noble wrote:

Then they might have grounds to sue the adviser, or complain to their professional body, among other things.
To take a chance on what internet posters might say about such a complex set (for ordinary people) of tax circumstances is in my view very unwise indeed.
What do you suggest the OP does?
--
Terry Fields

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