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Tenants in common IHT

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  • Tenants in common IHT

    I would appreciate some advice, if possible, please.




    It’s with regards to inheritance tax and tenants in common.




    Context: I am living with my parents, in my 30s. My parents are in their late 60s on pensions. I am blue badge registered (disabled) but my PIP benefits are currently on hold and with DWP tribunal. I am living with my parents due to ill health and am unable to care for myself.




    In 2014 my parents gifted me £200,000 (the money came from part of a previous house sale). This money was used, as well as £60,000 from my savings, to give me a 49% share of the house my parents and I purchased and currently live in (mum and dad hold 51% share. There is no mortgage).




    The house purchase price was £500,000 (plus all the associated costs etc).




    Subsequently mum and dad renovated the house at a cost of over £100,000 (I think around £125,000 - £150,000). This was paid for entirely by mum and dad.




    The current house valuation is around £850,000.




    My queries are with regards to inheritance tax.




    My health is failing and my will is such that my parents inherit my estate after a few bequests.




    The queries I have revolve around the fact that I realise that 49% of a £850,000 house is over the nil rate IHT allowance but I believe that my 49% should be diluted due to the significant extra funds my parents invested into the house.




    Can I reduce my % in the house legally, without financial repercussions. It’s not a ‘gift’ to my parents but a balancing of the % shares to reflect fairness.




    Also, as my parents gave me the £200,000 is is right that it gets taxed with IHT?




    Does is change anything that I live with my parents due to disability and they’re pensioners?




    Would I have to get the % share changed at a solicitor prior to my death?




    Thank you for reading.



    Tags: None

  • #2
    I’d love some advice if possible please.
    Sorry about the poor line formatting, something went awry there!

    Comment


    • #3
      Hi Talpal,
      This is quite complicated. I assume that there is a deed of trust in place stipulating the % shares each of you have? There should also be a restriction on the property title.
      The gift of £200k is part of your estate. Provided your parents survive 7 years after making this gift their estate will be unaffected. Until the 7 yr anniversary of the gift a tapering amount will be included in their estates for inheritance tax purposes.
      You can change your % shares by entering into a new Deed with your parents and registering it at HM Land Registry although they will also have to agree to this of course.
      You need to get some tax advice on the impact his can have to all of your estates.
      I am a qualified solicitor employed by the LegalBeagles forum to provide guidance on a wide range of legal queries. I am happy to try and assist informally, where needed.

      Any posts I make on LegalBeagles are for information and discussion purposes only and shouldn't be seen as legal advice. Any practical advice I give is without liability. I do not represent people on the forum.

      If in doubt you should always seek professional face to face legal advice.

      Comment

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