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Sam, Accountant
Category: Tax
Satisfied Customers: 14195
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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If My mum pays for an annexe for her to live in, which is attached

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If My mum pays for an annexe for her to live in, which is attached to my home, how is that treated as regards her "estate" will I eventually have to pay inheritance tax on the amount spent, or even on the incremental value to my home ?

Thanks for your question

Yes - this would - as this would be deemed to be an element of the property that Mum has paid for and is where she will live, so will form part of her estate.
So it would be important t-
1( get a valuation of the property before this build and after - to establish the % by which the annex contributes to the overall value of the property, so that same % could be considered at the necessary time of valuing Mums estate.

Inheritance tax will only be due IF - the value of Mums total estate at the time she passes is more than £325,000 (and of course this threshold might be more if Mum is a widow)

Do feel free to ask any follow up questions



Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.
Thanks Sam, but just to clarify, in effect mum then "owns" part of my property ? thanks Debbie
Hi Debbie

Thanks for your response

In essence yes, although the complication is that one could not be sold without the other !
Whether it would be prudent for Inheritance tax purposes for her to gift you the money for the build, - but that would require her, to then survive more than 7 years from the date of the gift, for it to be then exempt from Inheritance tax.

But of course this is only an issue if her total estate is more than the NIL threshold.

Let me know if you have any follow up questions, but it would be appreciated if you would rate the level of service provided, as this ensures I am credited for my time.