Crosswords0 min ago
Inheritance Tax
Hi
I rent my home from my 84 year old dad for a nominal charge, things aren't looking good for him at the moment. He has said he will leave me the house which is a bit depressing as I find it difficult to talk to him about him not being here.
His home which is worth quite a lot as is in Wimbledon and he has owned it for years he will be leaving to my brothers and sister so it kind of balances out. Mum died 18 months ago.
So his estate will be well over the Inheritance Tax threshold and my question is, will I need to pay tax on my home. 40% wouldn't be far of 100k which there is no way I could afford, have lived here happily for 3 years and have invested a lot of time modernising it.
Thanks for any input.
I rent my home from my 84 year old dad for a nominal charge, things aren't looking good for him at the moment. He has said he will leave me the house which is a bit depressing as I find it difficult to talk to him about him not being here.
His home which is worth quite a lot as is in Wimbledon and he has owned it for years he will be leaving to my brothers and sister so it kind of balances out. Mum died 18 months ago.
So his estate will be well over the Inheritance Tax threshold and my question is, will I need to pay tax on my home. 40% wouldn't be far of 100k which there is no way I could afford, have lived here happily for 3 years and have invested a lot of time modernising it.
Thanks for any input.
Answers
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you don't have to pay IHT at all - the estate pays it. However, you may find that if there is not enough cash in his estate to pay it, you will have to liquidate his assets (sell the homes) to pay it. I think it's fairly impossible for anyone to advise you here, as it will involve so many variables. Also, the future is not written - for all you know all three of you could die before your dad!
If he leaves the house to you in his will and states that it is to go to you free of inheritance tax, then any tax has to be paid from other assets. If the other assets are sufficient. But I suggest you visit the Citizens advice bureau, who may be able to get you a cheap or even free ( but brief) appointment with a solicitor. I have just been in a very similar situation, where I inherited a property, with the Inheritance tax being met from other assets. I did not have to pay any tax, but if I were to sell now I might well face capital gains tax. If the house is your only house, you would not face capital gains tax if/when you wanted to sell it.
The single persons nil rate inheritance tax amount is currently £325k, however assuming that your mother owned ½ the property (which passed to your father on her death), then her nil rate amount can be carried forward to his estate for inheritance purposes – giving nil tax on £650k.
If you are not aware of the above, you may need to seek legal advice to ensure that everything is in order, in terms of your mother’s inheritance allowance being passed on to your father’s estate.
If you are not aware of the above, you may need to seek legal advice to ensure that everything is in order, in terms of your mother’s inheritance allowance being passed on to your father’s estate.
well first of all it depends on your mother's will - did she leave everything to your Dad or was there a distribution of assets ?
The inheritance tax threshold for your Dad depends on this
see FF first post
"he has said...." does that mean there is no will (yet) ?
clearly that should be sorted ( not by you three but by him waking a will )
Everything gets lumped together as Bedknobs implies and then over the threshold the estate is taxed at 40%
Saying or thinking 'oh the little house is my share and I dont pay tax at all - they can ' is a complete non starter. - altho your father could specify that in his will if he wanted
None of you get anything the day after his death - there will be a process of probate and that is when the inheritance tax is paid by the executor who is named in the will. Then the assets are distributed.
IF there is family non agreement as to who gets what,
a judge is likely to order the whole lot to be sold and then divided by three.
From what you say it seems that you might have to start at square one:
get your dad to write a will
The inheritance tax threshold for your Dad depends on this
see FF first post
"he has said...." does that mean there is no will (yet) ?
clearly that should be sorted ( not by you three but by him waking a will )
Everything gets lumped together as Bedknobs implies and then over the threshold the estate is taxed at 40%
Saying or thinking 'oh the little house is my share and I dont pay tax at all - they can ' is a complete non starter. - altho your father could specify that in his will if he wanted
None of you get anything the day after his death - there will be a process of probate and that is when the inheritance tax is paid by the executor who is named in the will. Then the assets are distributed.
IF there is family non agreement as to who gets what,
a judge is likely to order the whole lot to be sold and then divided by three.
From what you say it seems that you might have to start at square one:
get your dad to write a will
Thanks for all of your quick responses. Yes he has a will which details the house going to me and the sale of his home going to my siblings and yes my mum passed assets to my dad. He does have a modest house and I doubt it would sell for 1 million but possibly close to that.
Will seek professional advice, we are a close family and won't be fighting over this. Difference is my chunk of inheritance is my home, the others will just get a house they can sell. Was hoping that it being my home would be exempt would likely have to move if not so need my dad to live longer for more than one reason!
Want to mark a best answer but they're all good, thanks.
Will seek professional advice, we are a close family and won't be fighting over this. Difference is my chunk of inheritance is my home, the others will just get a house they can sell. Was hoping that it being my home would be exempt would likely have to move if not so need my dad to live longer for more than one reason!
Want to mark a best answer but they're all good, thanks.
I looked up 'Wimbledon' house prices 2014 and a small terraced house was an average of £1,720,000, even a flat in Wimbledon goes for £750,000 plus.
Detached houses start at £2 million and go to £5 million or in some cases £7 million. During the 'tennis weeks' you can rent out a house in Wimbledon for anything up to £10,000 a week ! A lot of residents rent out their houses for the 2 week Wimbledon tournament and use the cash for an expensive luxury holiday .
Detached houses start at £2 million and go to £5 million or in some cases £7 million. During the 'tennis weeks' you can rent out a house in Wimbledon for anything up to £10,000 a week ! A lot of residents rent out their houses for the 2 week Wimbledon tournament and use the cash for an expensive luxury holiday .
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