Inheritance Tax

xirokx · 16 Mar 2009 at 18:06

Hey...

Does anyone know the tax free allowance a person is allowed to inherit?

Problem:- my gf's mum wants to put a house worth 400K on her and her sisters name and just wondered if they would have to pay inheritance tax if anything were to happen to her?

Also, she wants to transfer the title deeds on to them now but the elder daughter advised her to make a will so either sister cannot sell it now whilst she is still around - is this true? just incase of possible family issues (you know never).. so whats the legal and safe way to do this?

Thanks for your help

Cheers!

pingwing · 16 Mar 2009 at 18:10

Inheritance tax starts at 312k http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

To aviod it with propperty just make her a joint owner (theres 2 main types to this i think) so she cant sell without the others permission

(how my mum got a house when my dad died last year)

Raymond Lin · 16 Mar 2009 at 18:11

pingwing said:
Inheritance tax starts at 312k http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

To aviod it with propperty just make her a joint owner (theres 2 main types to this i think) so she cant sell without the others permission (how my mum got a house when my dad died last year)

I think the house is exempt anyway for a married couple.

xirokx · 16 Mar 2009 at 18:18

so if the house is worth 400k,

and both sisters get half = £200k

as its below the 312k threshold no inheritance tax neither sister would pay it?

pls clarify...

P.S. both sisters only have boyfriends and are not married...
thanks

philjohn · 16 Mar 2009 at 18:19

Raymond Lin said:
I think the house is exempt anyway for a married couple.

this.

You have to be careful with gifts as if the mother died within 7 years of the signing over it would still be liable for inheritance tax.

xirokx said:
so if the house is worth 400k,

and both sisters get half = £200k

as its below the 312k threshold no inheritance tax neither sister would pay it?

no, inheritance tax is based on the size of the estate, not the amount that goes to each benefactor.

int · 16 Mar 2009 at 18:22

If the house is co-signed in their name then inheritance doesn't come in to it I'm sure. It's only when the house is fully signed over that the tax comes in.

I'll be co-signing onto a house my granddad owns as he wants me to sell it / pay off my uni fees etc and it's a good way to avoid the large tax on inheritance. Will still end up paying some tax to sell it but it's not as much as the inheritance tax

xirokx · 16 Mar 2009 at 18:24

the size of the estate here would be a total of £200K, so would tax be payable

by estate I assume you mean total inherited?

would it still be liable if the estate went to 2 people and that value was below 312K

the house is not co-signed, its on their mums name only...

Raymond Lin · 16 Mar 2009 at 18:29

The estate means everything the deceased owns, properties, cars, stamp collection, bank balance, bonds, shares...etc.

ironman · 16 Mar 2009 at 18:30

By estate I think they mean the worth of the state before split up into sections, so in this case it would be £400k for the house.