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Harris
Harris, Law Specialist
Category: Law
Satisfied Customers: 2849
Experience:  Family Law - Specialist in Divorce, Financial Relief and Children Matters
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My mum is gifting me the proceeds of her house sale which

Customer Question

My mum is gifting me the proceeds of her house sale which equates to approx £571K. I am buying a house with this money and mum is coming to live with me. Do I have to worry about paying any tax on this amount, if she manages to live for another 7 years!
Submitted: 1 year ago.
Category: Law
Expert:  F E Smith replied 1 year ago.

Thank you. Interesting changes. Obviously, I could not have known, because you didn’t tell me, that the house in Seville was only owned by Caroline.

You have changed the date at clause 8. I apologise for putting 1996 and when it was the 1990s. My bad. It’s worth mentioning that it is normal to put “sometime during” the particular year if the date isn’t known. Otherwise, it implies that the incident happened for the whole of that time. It was done intentionally. As a you are happy with it out, that’s fine.

I obviously didn’t know the extent of the ownership of the properties in Seville noted at clause 14.

At least you have a document now that at least the Spanish advocate is happy with, and it’s still valid in English law of course.

Good look with the application of course.

Kind regards.

Fred

Customer: replied 1 year ago.
I think you may have replied to the wrong person. This has nothing to do with my question
Expert:  Harris replied 1 year ago.

Hi, thank you for your question and apologies for the above incorrect posting. Please confirm if you are in England or Wales?

Customer: replied 1 year ago.
England
Expert:  Harris replied 1 year ago.

Thank you. Your mother is free to gift whatever amount she wants to you and there will be no immediate tax implications for either of you. Firstly, if she survives for 7 years after gifting you the proceeds there will be no inheritance tax to pay. However, if she passes away at any time in the next 7 years then the proceeds she has gifted you return to her estate for inheritance tax consideration and the amount of any inheritance tax will depend on when exactly she passes away, initially the potential liability is 40% and this is gradually reduced over the period of 7 years.

I hope this assists you. If you found this information helpful please provide a positive rating using the stars at the top of this page. I will not be credited for your question without a positive rating. Thank you.

Harris, Law Specialist
Category: Law
Satisfied Customers: 2849
Experience: Family Law - Specialist in Divorce, Financial Relief and Children Matters
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Expert:  Clare replied 1 year ago.

My name is ***** ***** I have been a solicitor for more than 30 years.

I am afraid that since your mother will be living with you the 7 year rule may not apply as it could be regarded as a "Gift with retention of benefits"

You can read more about it here

http://wedlakebell.com/pdf/Gifts_with%20_reservation.pdf

It is a complex issue - and it may be possible to work the arrangements so that they will be acceptable BUT you must be aware of it and act accordingly

Clare

Customer: replied 1 year ago.
I've now 2 conflicting answers. Which one am I supposed to go with?? What happens when solicitors give conflicting views on this site.
Customer: replied 1 year ago.
I've tried reading that link and unsurprisingly it's in legalese which makes it practically impenetrable. 'Could not apply'? I would like to know what I need to do. I can't make any decisions or take any action on what might or might not be true.
Expert:  Clare replied 1 year ago.

I will be honest - going by what I read there is no question about it.

If your mother lives with you full time - for more than a month - then it will be seen as a "Gift with reservation of benefit"

There is a more readable explanation here

http://www.taxationweb.co.uk/tax-articles/inheritance-tax-iht-trusts-estates-capital-taxes/gifts-with-reservation-the-rules-explained.html

I would draw your attention to this part

"e) Provision for old age, infirmity etc

The donor's occupation of gifted land is not a GWR, broadly, if it represents reasonable provision for his care and maintenance due to old age, infirmity etc, and results from unforeseen changes in circumstances (eg. a sudden serious illness), and the donee is a relative of the donor or of his spouse or civil partner (s 102C(3), Sch 20 para 6(1)(b)). The 'reasonable' test is subjective, and whether it is met depends on the circumstances."

As it oculd be a possible work around