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Where Taxpayers and Advisers Meet

Unusual probate with IHT

berttbalcon
Posts:1
Joined:Tue Oct 31, 2017 9:29 pm
Unusual probate with IHT

Postby berttbalcon » Tue Oct 31, 2017 9:50 pm

Hi
When parents moved to new house in 2001, downsizing, Dad was advised to put the house into joint ownership of his 4 children (therefore 4 owners, no parental ownership). Parents lived there, no rent.
Dad died 2003, value of house was approx same value as IHT - 255K. His estate passed across to Mother. Who lived in house until she bought retirement flat in 2014. We then sold house and all of us advised tax office of CGT.
Mother lived in flat for less than 2 years then in care home until passing away recently.
On the probate form and advisory notes there is this point
When someone has a right to live in a house this can have the same effect as a trust for Inheritance Tax, even if the right to live in the house is not formally expressed as a trust for that person’s benefit. Often, this type of right arises under another person's will and can apply whether or not the house is owned jointly. If the deceased did not own their home and was not a tenant either, they may have been living there under this sort of arrangement. If so, you may need to include the value of the deceased’s home on form IHT205(2011).

It appears that we have to add the value of the property at time of sale approx 260K, which puts mothers estate well above the current IHT level.
So are we liable for IHT on mothers estate plus value of previous property (in or names as gifted by Dad ) If this is correct does the taper relief kick in from time mother lost her benefit ie over 3 years before?
Or as there is no current benefit (nor for 3 years) are we OK not to include the previous house sale in IHT form for probate? (or other reasons that dictate we do not have to declare the property)
Input most gratefully welcome
Thanks

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