novel IHT solution?

[dan_montagnani@hotma]

our family wishes to minimise IHT liability associated with my mother's estate.
i own a flat worth approximately £150k
my mother owns a house worth £500k with £100k debt / mortgage. this is effectively her entire estate.
my mother is not able to sustain living in her house alone and so i have moved in with her and effectively pay for the maintenance and repair of the property.
i wish to acquire a share of the property (with a view to eventual ownership) whilst at the same time avoiding IHT (and Capital Gains Tax)liability that may arise for myself and two siblings.
would an appropriate solution be for me to purchase a £200k share whilst she gifts £100k to each child and at the same time i sell my flat to her.
the flat is rented out and generates a modest income for me which basically covers the mortgage. my proposal would be for this to obviously go to my mother as her new income and she could then pay a market rent to me for living in the house and hence addressing the Gift With Reservation issue.
our only tax exposure would be on the £300k (minus £263k allowance) as a Potentially Exempt Transfer decreasing over a 7 year period.
would this be a viable solution???

[Anthony Nixon]

It all works OK but note that, once you are living in the house, your mother can give you a share completely free of risk of IHT reservation of benefit and the new pre-owned assets tax.

The advantage of gifts, both from your mother to you and from you to mother is that there is no satmp duty land tax to pay.

You could make the gifts to your siblings that your mother planned to make.

Anthony Nixon
Partner
Lester Aldridge Solicitors
Alleyn House
Carlton Crescent
Southampton
SO15 2EU

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