Buying My Mum's Flat From Her

[Ric.ror]

About six years ago my Mum bought her council flat. One of the clauses was that she did not re-sell for seven years, unless it is back to the HA. Yesterday she told me she had spoken to her hairdresser and she has advised her to transfer the flat to me as soon as possible, suggesting that even with money spent on a solicitor it would be worth it in the long run. I suspect this has something to do with inheritance tax - but, as the flat is probably worth less the £100,000 is this necessary?

[Zacs-Master]

'The rules about passing on property are complicated, so it's a good idea to seek legal advice.' (not your hairdresser).

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm

[hc4361]

The current threshold for inheritance tax is £325,000 so if her total assets including the house, money, stocks, shares, jewellery, antiques and everything else is less than this amount no inheritance tax will be payable.

[237SJ]

The idea might be to squirrel the property away so that if your mother needs to go into care, she won`t have to pay for it. I don`t think it`s as easy as that though. The Councils know every trick in the book.

[hc4361]

The question is about inheritance tax.

[Ric.ror]

Thank you all for your answers
As the hairdresser is in the day centre I suspect that the hairdresser was refering to something to do with care home feed as well as inheritance tax

[hc4361]

In that case it is too complicated to answer here, all sorts of information is needed.
Do you live in the flat?
Does your mother?
Is your father still alive and living in the flat?
Do you own another property that you live in?
Is your mother likely to need to go in to a home soon?

[hc4361]

Also, are you in receipt of means tested benefits?
Is your mother?

[factor-fiction]

A lot of people worry about IHT when in practice it will never apply to their estate. The allowance is £325000 as others have said but if she is a widow the allowance would probably be £650000. It's more likely that the advice was given to avoid possible care home fees.
Financial advice from hairdressers is normally no more reliable than advice from taxi drivers on which shares to buy

[Ric.ror]

Do you live in the flat? - No I don't live in the flat. An idea is for me to move into the flat whilst Mum gets a ground floor flat in Sheltered Accom. She finds the current stairs a challenge and also the loneliness is a little problematic
Does your mother? - Yes she currently lives there
Is your father still alive and living in the flat? My step father died about 6 years ago leaving her approx £280,000 - She gave me the money to buy my house and then bought her flat.
Do you own another property that you live in? See above
Is your mother likely to need to go in to a home soon? Well she was 86 last week and, apart from a mobility problem she is healthy. She can walk just not too far for too long

I personally don't receive any benefits (but would like to find out more about this as I intend to reduce my hours at work soon to help her further)
I'm not sure what she receives - she has three (tiny) pensions and a state pension and (I think) careers allowance

Does this make any sense to any one - personally it all gives me a headache

[buildersmate]

As was suggested earlier, this suggestion by that well-known source of dubious financial advice, the hairdresser, is likely to be to do with payment for care in later life.
There is no substitute for proper paid-for financial advice, but unless this flat is worth substantially more than £300k, it seems unlikely your mother's estate on her eventual passing would be paying IHT.
You should be made aware though that she has to live or 7 years after the date of the gift to you for the full impact of IHT liability to all to zero. You said it happened around six years ago, and she sounds pretty healthy at present.
The likely issue, then, is care payments, as if someone gives away all or most of their assets, then expects the local authority to fund the cost of care, most authorities don't take that lying down, and they make strenuous efforts to track the gifted assets. With a house they would put a secondary charge on it such that mix much later when you sold it, they would be alerted via the Land Registry, then make their claim against incurred costs of care.
No hers will provide you further insight from their own experience.

[Stargazer]

If you already own a property in your nane, remember that Capital Gains tax will have to be paid upon selling either one.

[Ric.ror]

Thank you for your answers
I, too, suspect the hairdresser was alluding to any future care payments.