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Where Taxpayers and Advisers Meet

Life rent - inheritance tax

Posts: 1
Joined: Tue May 28, 2019 9:43 am

Life rent - inheritance tax

Postby tgarthgarth » Tue May 28, 2019 10:32 am

My 80-year-old mother is living in a house owned by the children of her late second husband, on a life rent basis. We (her children) were obviously aware of this situation but have only just found out that, when she dies, the house will be deemed as part of her estate. We will therefore be liable to pay IHT on a property which we will not inherit. This seems bizarre. Or is this standard practice regarding life rent situations?? Hoping someone can advise. Thank you.

Posts: 7877
Joined: Wed Aug 06, 2008 3:25 pm

Re: Life rent - inheritance tax

Postby maths » Tue May 28, 2019 3:08 pm

It would seem your mother has what is referred to as a qualifying interest in possession ink the house in which she lives.

As a consequence, you are correct that on mother's death the value of the property will be included as part of her estate for IHT purposes. However, the IHT which will be attributable to this interest in possession will be the responsibility of those who inherit the property on her death (children of late second husband).

Nevertheless, this may have a knock-on effect on the amount of IHT attributable to mother's own estate.

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