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Tax on inherited property

Tax on sale or inherited property

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Me and my mother were left my grandmother's property in her will in equal parts.

We are selling the family home for £110,000. I understand that we don't need to pay inheritance tax as this is below the threshold and it is a home that we currently live in.

My question is would there be tax payable if my mother wanted to give me the £55000 from her part of the sale as a gift.

 Would the gift come under the 7 year rule?

 

Replies (17)

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By TomFrenchy91
09th Jan 2022 16:22

I mean my grandmother's house!!

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By Hugo Fair
09th Jan 2022 16:58

As per your previous post, the best recommendation is to get yourself an accountant.

Not being unkind, but there's so many apparent errors here - and it's difficult to disentangle what may be just typos/grammar (as per missing out the word 'house' in OP) from those that indicate a poor/partial understanding of the topic.
* what do you mean by "the family home" and how is this relevant to IHT?
* is it the same property as the one belonging to your grandmother?
* if so, irrespective of whether there is any IHT to pay, there will a return to be filed (for the whole estate not just the property).
* the fact that it (the same property?) is "a home that we currently live in" has no bearing on whether inheritance tax (which is payable by the estate not you) is due - except for when some very specific and rare circumstances apply..

And so we move to what appears to be your actual question - "would there be tax payable if my mother wanted to give me the £55000 from her part of the sale as a gift."
What tax did you have in mind? And when (at the point of gifting or at a later date)?

But, most puzzlingly of all, what does your "mother wanting to give me the £55000 from her part of the sale as a gift" have to do with your grandmother's death or will or consequential potential IHT?
First, no-one (your mother or you) owns the proceeds from the sale until Probate on the estate has been granted (and thereby allowing distribution from the estate to be made).
But also, there may be better ways to achieve your desired end position (such as via a Deed of Variation to the terms of your grandmother's will).

If, despite all the above, your mother ends up gifting you a sum of £55,000 (irrespective of the source of the money) ... then yes the '7 year rule' can kick in (but in terms of potential IHT on your mother's, not grandmother's, estate).

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Replying to Hugo Fair:
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By TomFrenchy91
09th Jan 2022 17:48

Sorry that was me rushing

The house is currently in my deceased grandmother's name and is currently being transferred with the land registry as per the grant of probate into mine and my mother's name.

We currently live at the property but we are planning to sell for £110,000

My mother wants to give me her part of the sale. We have no date when my mother plans to gift me the money as of yet.

My question about the tax on a gift of £55,000 is that I read there is a £3000 threshold per year.

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By The Dullard
09th Jan 2022 17:28

There won't be any IHT on selling the house. There may be CGT depending on all the facts you haven't given us.

If your mum gives you cash that will be a PET for IHT purposes, without any further CGT consequences, and will reduce the available NRB on her death if she dies within 7 years.

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Replying to The Dullard:
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By TomFrenchy91
09th Jan 2022 18:16

It will be the only home we own and our 'main home' we don't own any other properties.

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By Leywood
09th Jan 2022 17:48

You need to pay for an Accountant to advise you.

Or are you going to continue making mistakes?
https://www.accountingweb.co.uk/any-answers/registering-for-paye-0

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Replying to Leywood:
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By TomFrenchy91
09th Jan 2022 18:05

I accept the stupid mistake on my last question

Just a question on this one. No mistakes here

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Replying to TomFrenchy91:
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By Leywood
09th Jan 2022 18:11

You are making several mistakes.

By not getting bespoke advice
By not paying for it, no-one to sue if it is wrong.
By trusting a bunch of strangers on the internet, of whom you know nothing.
By taking advice from this site when it very clearly states that you cannot rely on anything as tax advice.

I could go on and explain the other mistakes.

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Replying to Leywood:
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By TomFrenchy91
09th Jan 2022 18:18

I'm allowed to ask questions..

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Replying to TomFrenchy91:
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By Hugo Fair
09th Jan 2022 18:49

You are indeed ... but without professional guidance, how can you be sure you're asking the right questions?
[Providing answers is the easy bit (if you're suitably experienced), but asking the questions relevant to your circumstances and your objectives is far more of a skill than many realise].
Did you pick up on the hint in my earlier response that might save you a lot of grief and costs?

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Replying to TomFrenchy91:
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By David Ex
09th Jan 2022 19:12

TomFrenchy91 wrote:

I'm allowed to ask questions..

https://www.accountingweb.co.uk/any-answers/how-to-use-any-answers

"Users are free to seek clarification for technical issues that are troubling them, but tax and accounting can be very complex. Any Answers conversations can get very involved around what the legislation says and how different people interpret the regulations. As one member wisely advised: “If you intend to plan a course of action based on what you read in here, you should instead be taking professional advice.”

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By Tax Dragon
09th Jan 2022 20:53

Where's your mother going to live after she's sold her only home and given you the proceeds?

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Replying to Tax Dragon:
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By Hugo Fair
09th Jan 2022 21:12

Bullseye ... assuming that property is the only property owned by mother (which I'm fairly sure was stated before OP had several revisions applied to it)!
Of course if she has other property/ies then ...

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Replying to Tax Dragon:
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By TomFrenchy91
09th Jan 2022 22:03

She plans to rent a bungalow until an annex is created off a new property

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Replying to TomFrenchy91:
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By Tax Dragon
09th Jan 2022 22:29

Then to avoid POAT (use a search engine) your mother will probably want to elect into the GWROB (use a search engine) regime and so remove any IHT - I mean on your mother's estate - benefit from making the gift.

The person who most needs advice here is your mother. I don't give advice in here, but it seems to me that she shouldn't be giving away £55,000 (is that a lot to her?) without being aware of the consequences (probably legal before tax).

PS - hopefully this helps you understand Hugo's point about the need for someone to ask you/your mother certain questions in order to advise. The Dullard mentioned unstated facts. Same point, different questions to the one I asked - which was just one of many I would have if advising.

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By bernard michael
10th Jan 2022 10:08

How long have you and mother lived in grandmother's property as your only residence ?? Did grandmother also live with you and if so for how long did you all lived together??

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paddle steamer
By DJKL
10th Jan 2022 10:11

Is there scope for a Deed of Variation re "Grandmother's estate" ,might this be an avenue worth considering?

As others have pointed out taking professional advice is the only sensible way to proceed .

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