IHT and Mother

[billypiper]

Property given to me by my Mother 12 years ago the value was 600,000 at that time. She continues to live in the property .

She pays me market rent to avoid the Gift with reservation rules.

I want to sell the property and buy a smaller property in my name for £320,000 for her to occupy.

I am aware of the CGT problem.

RE IHT does she still have to pay me market rent on £320,000 to avoid the Gift with reservation rules.

Can I give her the money let her own the property. As it will be her only asset it will be below the IHT threshold. Therefore she does not have to pay me rent

[section 44]

Can I give her the money let her own the property.

You can, although clearly that would be PET from your estate.

[billypiper]

Thanks section 44

If the purchase price was say £600,000

Could I lend the money to my Mother to buy the property.

Then she would have no IHT to pay on death.

No PET for me

IS GROB still a problem?

[section 44]

sounds fine

[dennywren]

So

If there is a property which is subject to the GROB charge does this disappear when the property is sold and the funds are used to buy another property

[maths]

The purchase of the £320K property out of the £600K sale proceeds in which mother lives appears to fall foul of the pre-owned asset legislation.

Lending mother the £600K to buy her own property will not rank as a deductible debt on her death.

[dennywren]

So

If Mother buys property for £320,000 from the money lent from the daughter. as maths says the £320000 debt is not deductible, so the mother will be in the nil rate band as no other assets.

So no GROB rent charge needed?

Agrees