Inheritance tax

[FlyingBanana]

Hi. I wonder if someone can clear something up for me please?
Ten years ago my father left his 3 children half of his home (owned as tenants in common ith his wife, our mum). Is it a fact that in order to avoid any inheritance tax on his legacy my mum should be paying us children a market rent for our half of the property as she is still living in it?

[chas2008]

wouldnt of thought so, I believe as the legacy is over 7 years it should be safe from tax

[lukey121]

My grandmother signed her house to my mum to avoid inheritance tax. (6 years before she died) Before you do this get the house valued. The house is then capped at that value. After the transfer my Grandmother paid £200 a month into my moms account. Didnt have to be market rent, just some rent. My mum then would use that money to buy my Grandmothers shopping. (Obviously she had no intention of keeping this money for herself)
After my Grandmother died there was absolutely no inheritance tax on the house which was worth £320 000 pounds.(inheritance tax is now £325,000 but was alot less back then)
I must say, it was never checked if there were payments paid to my mum from my Grandmother, but if it had been investigated it would have all been legal.
Hope this makes sense.

[buildersmate]

This is regarded as a 'gift with reservations' by HMRC. In other words, the person gifting it didn't really gift it at all. Provided certain undertaking regarding rent and paying tax on the rent are met, it MAY be possible to get away with it - there is a bit more on it here.
http://www.inheritanc...&_inheritance_tax.htm

[FlyingBanana]

Thanks everyone.

[lukey121]

It may be possible to get away with it? IT IS, we did it. There is no maybe about it. And it was all done legally. There was no "getting away with it"