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Where Taxpayers and Advisers Meet

Early inheritance vs. mortgage extension

Rufus77
Posts:4
Joined:Thu Feb 21, 2019 11:47 am
Early inheritance vs. mortgage extension

Postby Rufus77 » Tue Jun 08, 2021 11:35 am

We need to do a complete renovation on our house which we think is going to cost in the region of £70k. Our plan was to extend our mortgage to pay for this but my husband's parents have said they would like to help us with the finances. His parents are in their 70s and not in the best health although nothing life-threatening. They have a sizeable estate which would be over the inheritance tax threshold. They have 3 children, including my husband.
Is there a tax efficient way of them helping us out with our renovation costs?
Could they give us some or all of the money we need? Could they lend us some or all of the money we need? Could they pay our contractors directly?
Any advice would be greatly appreciated.

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Early inheritance vs. mortgage extension

Postby Jholm » Tue Jun 08, 2021 12:20 pm

A loan is an option but the outstanding debt would form part of their estate, should the worst happen.

Otherwise, you're looking at a PET of £70k, that could become chargeable within 7 years. Them paying the contractors doesn't change this.

There is no info re: lifetime transfers in the 7y prior so I cannot comment as to the available NRB (nil rate band).

Rufus77
Posts:4
Joined:Thu Feb 21, 2019 11:47 am

Re: Early inheritance vs. mortgage extension

Postby Rufus77 » Tue Jun 08, 2021 4:47 pm

Thank you!


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