Self build mortgage and Inheritance tax?

[1pudding1]

Hi, hope somebody can help with a few questions on the off chance someone on here is knowledgeable in this area.

I plan on building my own house next year. We have planning permission already. The house is to be built on a piece of land the father in law owns 25 miles from his main residence, and that he bought last year with planning permission already approved on it, for £100k.

Initially, in order to get a self build mortgage, I thought the best way is to have the land gifted to my wife, and then we can use that as equity for a self build mortgage? However father in law is concerned about inheritance tax if we do that, and has suggested keeping the land in his name and then him acting as a guarantor on our mortgage, using the land as equity, if that's even possible?

If we did have the land transferred to our name, and the worst did happen to the father in law, all his assets would be passed to the mother in law. In this case we would still not be liable for any IHT then I assume, unless the worst should happen to her with 7 years of the gift of land?

Any suggestions on the best way forward? How to avoid any tax issues and use the land as equity to get the best self build mortgage?

Thanks.

 

[1pudding1]

Thanks for the advice. Yes Im actually going to Buildstore on Friday to talk to them there about finance. Shame about the mags, would've come in handy, but Ive got a years worth of Home Building & Renovation mags from the father in law to keep me going

I didn't know that the £325k allowance would be combined into £650 tax free Vita, thanks for that. Will look into that to make sure, but if thats true, then Im sure we'd be fine should the worst happens and they both pass away within 7 years.

It does seem like the easiest way is to transfer the land to my wife and then use that for the equity for the self build mortgage.

Cheers