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Category: Tax
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My elderly mother wants to sell her house and live with me.

Customer Question

My elderly mother wants to sell her house and live with me. She wants to invest from the sale of her house in improvements such as new kitchen, decorating and extension.
we dont want her name on the deeds as thus would complicate matters in the event of her death. What, if any, are the tax implications. I am retired.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
, I'm Keith and happy to help you with your question.
This is either a gift to you by your mother or a loan. Both such matters are outside the scope of UK taxation.
However, any interest paid on loans is taxable income in the hands of the recipient.
Any gift to you may well be a Potentially Exempt Transfer (PET). PETs run off at a taper over 7 years and in the event of decease of the donor within that time will be added back to her estate Tax (IT) purposes. If the estate is insufficient to meet the IT on the PET the liability cascades down to the beneficiary payment. The classic defence against a PET is a reducing term life insurance policy, but I appreciate that if the donor is elderly premiums may be prohibitive. IT does not kick in until the estate reaches 325K and is at 40% flat rate on the surplus. The 325K is inflated by any inter spousal and charitable bequests and if the latter exceed 10% of the estate the rate of IT drops to 36%.
I do hope that I have thrown some light on your situation.
bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you support.

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