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Where Taxpayers and Advisers Meet

IHT: family home gift from one divorced parent

bearer
Posts:2
Joined:Wed Jun 23, 2021 1:20 pm
IHT: family home gift from one divorced parent

Postby bearer » Wed Jun 23, 2021 2:13 pm

Hello all, sorry my first contribution to the community is not a selfless one.

Parents bought home in 1997 by joint tenancy. Divorced 2003 and father moved out and gifted his equity to 2 children, retained no benefit. Mother proceeded to live and pay mortgage alone.

Mother and 2 children remortgaged in 2011, mother banked loan then bought 3 buy to let properties in her sole name.

By 2020, two of the rental properties had been sold with 1 of the adult children living in the other rental, the other moved back in with mother for last 6 years to help with care as mother now disabled, sharing running costs. Mother holds cash assets of £120k, family home is worth £500k, second home worth £120k. Remortgage paid off and no known debts.

Mother has no valid will, 3 children next of kin.

Would there be inheritance tax due upon mother's demise?

Bonus question: Do the mother and 2 children own 33% each by default or 50%, 25%, 25%?

pawncob
Posts:4724
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: IHT: family home gift from one divorced parent

Postby pawncob » Thu Jun 24, 2021 9:40 am

Mother owns 50% of PPR and children 25% each.
Her assets are £120k+£250k for PPR+£120k for let property.
Make a will as soon as possible. Take advice. PPR, if left to children increases IHT relief by £175k and reduces estate below IHT threshold.
With a pinch of salt take what I say, but don't exceed your RDA

bearer
Posts:2
Joined:Wed Jun 23, 2021 1:20 pm

Re: IHT: family home gift from one divorced parent

Postby bearer » Fri Jun 25, 2021 3:48 am

I greatly appreciate your advice, thank you


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