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bigduckontax, Accountant
Category: Tax
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My sister and I are planning to buy my parents house from

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Hi my sister and I are planning to buy my parents house from them as they want to gift to us but they still have outstanding £200k left on equity. So we plan to buy from them then they will gift the amount they receive from the sale of house which would be around £600k. Would we get taxed on this money? Would it even be allowed to gift this amount?

Hello, I am one of the experts on Jut Answer and pleased to be able to help you with yur question.

The UK has no Gifts Tax Regime so a gift would come to you tax free. Just thank your lucky stars you don't live in France where the tax kicks in at 70% over 5k Euros!

The gift would create a Potentially Exempt Transfer (PET) in their Inheritance Tax (IHT) affairs. PETs run off at a taper over 7 years and in the event of a decease within this period would be added back to the estate for the IHT computation. PETs are the first to suffr IHT and if the estate is insufficient to meet the tax on the PET than the liability cascades down to the beneficiary for immediate payment. The classic defence against a PET is a reducing term life insurance policy.

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Customer: replied 2 years ago.
Thank you so much for your reply was very helpful

Thank you for your support.