Indeed, as long as it goes into property in a sensible way!
Realised FOMO / missing the boat
- Thread starter HangTime
- Start date
That's the point though, by not moving up the ladder we've gained less equity. So my children's inheritance (or pre-inheritance help, whatever) is 'reduced' (grown less than it otherwise would have done).
The mortgage was already paid off, so our equity is only growing in line with the value of our house. If we had a more expensive house, we'd be gaining equity quicker (assuming both properties rose at the same rate).
I guess we're a bit unusual in that we're in our 40s with two kids, living in the same house we bought when in our 20s with no kids when we earned about a third of what we do now. I feel like most people would have scaled their property a bit with their age / family size / income.
Associate
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- 2 Jul 2019
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If you want to take that view on it, then yeah. Realistically you'd need to release equity one way or another as i'd like to think you're not dying before you're 70. Though i'm guessing you and your kids ages here.
Associate
- Joined
- 2 Jul 2019
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If used on travelling, then for sure! Not just peeing it up the wall imo. Though 5k to 50k is quite a contrast.
I guess it depends what we mean in 'in the long run', but I don't see equity release as being a big hurdle, it's also more likely that the kids could comfortably live at home for longer if needed if we had a bigger house (I've never really thought about this before, but the idea of having two extra adults living in our current house doesn't fill me with joy).
As for the 5k vs 50k thing, I guess it depends if you mean 50k at today's prices or 50k in 30 years time. I'd argue £50k in 2022 is better than £5k in 2022. A 20-something can't do much with £5k now, that buys you a basic used car.
I get the idea that when you are younger a bit of money seems more of a big deal, as you get older it's just a number on a spreadsheet, but fundamentally the purchasing power of money is the same regardless of how old you are.
A counter-argument might be that a person in their 20s can "live a bit" with very little money. Whereas a person in their 50s might NEED more money to live a bit, because they need to pay to take their kids on holiday, pay for childcare bla bla.
In other words a 20-something might not need any extra money at all to have a good time cos their fun isn't influenced by money as much, if we assume they aren't completely skint to begin with.
Man of Honour
It's tough for sure. Problem is things like inheritance tax has for many also killed that especially to the high house prices. One of my best friend's father died recently, his mother had already passed away, so they have their property to deal with, it's basically left them no choice but to sell the home, as the mortgage they'd need to take out is not worth it and I think they also will get stung on capital gains tax (not sure about this one). so not only have they lost their last parent but now they have to sort out 100ks worth of tax - it's all quite stressful. It gets harder when there's foreign properties involved.
I think one of the key things to do as a parent is to make sure you ensure you "gift" your property (I think you have to survive 7 years) or put it in a trust I think... but even that takes planning and time and it's not all that straight forward.
I think it's possible to get on the ladder with 2 people and no kids, but you have to be very good at budgeting and also make some sacrifices that not everyone wants to do.
Soldato
Inheritance Tax unless the house is above a certain value I think?
Not sure how it works when both parents died at different times, but think the inheritance tax rules are fairly reasonable, and should be tax free below a certain figure.
How Inheritance Tax works: thresholds, rules and allowances
Inheritance Tax (IHT) is paid when a person's estate is worth more than £325,000 when they die - exemptions, passing on property. Sometimes known as death duties.
Don't think it forms part of capital gains if you sell it, if it came from the estate of the inheritance and didn't require tax above the threshold.
Man of Honour
Inheritance Tax unless the house is above a certain value I think?
Not sure how it works when both parents died at different times, but think the inheritance tax rules are fairly reasonable, and should be tax free below a certain figure.
How Inheritance Tax works: thresholds, rules and allowances
Inheritance Tax (IHT) is paid when a person's estate is worth more than £325,000 when they die - exemptions, passing on property. Sometimes known as death duties.www.gov.uk
Don't think it forms part of capital gains if you sell it, if it came from the estate of the inheritance and didn't require tax above the threshold.
It's only just happened (well within the last month) so I was more interested in helping him grieve than that, but he started to talk about all this stuff to sort out and it just seemed to be quite a lot of admin and cost involved. I don't know the details - but I'm sure he'll look into it. I did a quick zoopla of the home, it's over 900k... so just a "little" over the allowance!
My point was that I don't always think things are as simple as "handing down" nowadays as house prices are so high, but possible pervious generations benefited from keeping homes in the family more effectively.
Perhaps I'm completely mistaken - but dying doesn't seem to help any offspring!
Soldato
It's only just happened (well within the last month) so I was more interested in helping him grieve than that, but he started to talk about all this stuff to sort out and it just seemed to be quite a lot of admin and cost involved. I don't know the details - but I'm sure he'll look into it. I did a quick zoopla of the home, it's over 900k... so just a "little" over the allowance!
My point was that I don't always think things are as simple as "handing down" nowadays as house prices are so high, but possible pervious generations benefited from keeping homes in the family more effectively.
Perhaps I'm completely mistaken - but dying doesn't seem to help any offspring!
Understandable, it's a horrible thing to have to deal with. I'm lucky both my parents are still fighting fit, though getting on a bit.
I suspect if the value is too high they may need to sell it as part of the estate, or else you have to pay the tax above the threshold from other funds (which could also be in the estate in the form of bank accounts/shares etc). The worth of the estate (balance of assets and debts) will give a final settlement value, and then that is set against the threshold. Afaik anything above tax free threshold is taxable at 40%, but I think the threshold is still fairly generous.
Might be that some of this work can be offloaded to someone like an accountant? must admit not sure how you get to the bottom of that without a professional.
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Soldato
No chance I'm just giving my kids a blank £50k cheque to spank up the wall.
I meant, I'd help them with a deposit to get them onto the property ladder. Certainly wouldn't be spending my money on a depreciating asset like a 'nice' car. They want anything above and beyond the cheapest POS I can find with an MOT and group 1 insurance - they can earn it.