OT - house inheritance

[John Rumm]

Although there could well be IHT to pay on the estate, which could necessitate sale of the house...

[Lobster]

...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.

[Dave Liquorice]

Gifts like this are bit tricksy and you really *do* need to get professional advice from some one who understands the rules and is up to date with them and understands how the bit of HMRC that will see it is likely to handle it.

HMRC take a very dim view of people giving away part or all of an asset but still retaining (some) benefit from that asset. If the OP gave half this property to his wife and they let it out he'd still be getting benefit from the half he has given away, from the rental income etc... Splitting the rental income in the same proportion as the gift might placate HMRC but I wouldn't like to bet on it, it might start them sniffing about for other things, even if there aren't any.

If HMRC start an investigation you have to be able to account for virtually every penny that has passed your way for almost as many years back as they care to choose.

Depending on how the property has been left to the OP, the wife might not be a direct recipient of the inheritance. Thus any (partial) transfer of the property to her could be considered income and thus liable to income tax. I *think* there are still ways to make this sort of gift and I

*think* there is some form of taper relief over 7 years should you pop your clogs in that seven years. As I said it's tricksy and you need proper advice to get this right (for the current rules...).

Agreed, but note "recipient" and "CGT"... "Recipient" could be both the OP and his wife, but I'm not sure if the "recipient" can be changed from that as specified in the Will, I some how think not. If the Will says "property X to Mr John Smith" then it goes to Mr John Smith only, not Mr John Smith and his wife.

[Bill Wright]

CGT is only levied on the amount the property increases in value between you acquiring it and selling it.

Bill

[Terry Fields]

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

[F]

I got half in the Will and my sister got the other half. I/we are buying her out.

As you say, it's tricky, trickier than I expected. Thanks for the good advice.

[F]

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...

[stuart noble]

IME basic IHT is pretty straightforward, and the documentation easy to understand. A completely avoidable tax if you give things away and live another 7 years, and completely unavoidable if you don't. The accountants' expensive attempts to avoid it through trusts etc usually have a coach and horses driven through them by the taxman.

The seven year rule is a bugger, mainly because old people tend not to keep accurate records that far back and the burden of proof is always on the taxpayer.

[Terry Fields]

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...

(basics)

(scroll down to Capital Gains Tax).

HTH

[stuart noble]

People I know have paid good money for very bad advice

[Terry Fields]

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?

[Huge]

On the other hand, taking legal advice from Usenet (even from a moderated group) is insane.

[stuart noble]

Reading the tax office guides on IHT would be a good start because the principles behind this particular tax are annoyingly straightforward. By all means get a pro in if you dispute what you're being charged or if your affairs are complicated to start with.

[stuart noble]

professional body, among other things.

(for ordinary people) of tax

Reading the tax office guides on IHT would be a good start because the principles behind this particular tax are annoyingly straightforward. By all means get a pro in if you dispute what you're being charged or if your affairs are complicated to start with.

[bert]

IHT allowance is transferable to surviving spouse. Also worth considering if you plan to rent house to put in joint name if your wife/partner has unused tax allowance.

[F]

I saw the solicitor today and had a long discussion on the best way forward. Lots of suggestions and advice from him and, with advice and comments I got here in mind, I was able to sort out exactly what I wanted to do.

Thanks again for the help!

[ss]

F be careful on this and get proper advice, many aspects of this are simple enough in isolation but there are many areas that can impact on other parts in order to get the final sum. If being done properly you will have to divulge much more information than you would be prepared to put on this NG so we already have an incomplete picture and without full information it is impossible even for those that would be qualified to give you a definitive answer.

The final choice is yours but I would avoid banks or solicitors for the initial advice and use a solicitor when required to legalise your wishes.

[F]

Agreed, and I'm content with advice I've got from a number of sources...

[Dave Liquorice]

If you are not requiring a mortgage to buy out your sisters share you don't have to do all the normal "house buying" conveyancing stuff, it's a simple asset purchase at an agreed price. It is still worth getting a proper written valuation so a) you all have a fair starting point from which to agree a price and b) you have something official to show HMRC the purchase cost when you (or you estate) comes to dispose of it. Note that this valuation isn't the best selling price that might be achievable if you left the place on the market for two years, it's a realistic "for a quick sale" valuation. Let who ever values the property know this.

After that it's more or less just needing to get the right names etc on the Land Registry, so do the "purchase" before you tell the LR about the required changes. Rather than having to give them two changes and fees etc.

[ianp5852]

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