Possible Way Around Inheritance Tax?

[Frankieola]

My mother's only asset would be the family home which is currently worth about £400000. I might be wrong but I assume that I would have to pay inheritance tax on any amount over £325000 at 40% so that would cost approximately £30000.
Could my mum "sell" me her house at an artificially low value, say £15000 to get round this or would I be chased for this later on down the line?
if this is illegal or would not work, What would be the most tax efficient way to get round this?
Any help or advice would be appreciated. Thanks

[Buenchico]

Your father might need to be considered here too. If he has passed away, and left everything to your mother, then she also inherits his IHT allowance, meaning that there's no IHT to be paid if her estate is valued at less than £650,000.

Your mother can sell the house you at any price she likes (or simply give it to you) but, if it's not to be counted as part of her estate for IHT purposes, she can no longer live in it unless she pays a 'fair market rent' to you. If she otherwise retains any interest in it, the house will still be counted as one of her assets for IHT purposes.

[Frankieola]

Thanks. My father passed away in July last year but did not leave a will, Does this complicate matters?

[fiction-factory]

So your Mum should have an allowance of £650000 so the Estate is unlikely to come anywhere near the threshold unless she has large savings/shares holdings.

[Buenchico]

As long as the total value of your father's estate was less than £250,000 everything he owned will have passed to your mother. (If your mother and father jointly owned their house as 'tenants in common' then half of the value of the house needed to be counted as part of his estate. If they jointly owned the property as 'joint tenants' then none of the value of the house counted as part of his estate).

So it's likely that everything passed to your mother, including your father's IHT allowance.

[Peter Pedant]

sorry to hear your father died Frank
it means you can add his tax free wodge to your mums on her passing and pay nothing at all when you sell up

Plan A by the way would never work
she cant give you the house and stay in it
gos against interest in possession rules and reservation of benefit
you can google both - they are virtually the same

selling under values falls foul of basically the same rules

https://www.gov.uk/trusts-taxes/trusts-and-inheritance-tax

doesnt explain it very well
the effect is that inheritance tax is due as if the trust didnt exist and there was no transfer ( but CGT may also be due as if the trust HAD taken effect ) oops something to keep away from then

[Peter Pedant]

BC did this for a living Frankie

clearly if you late dad didnt own any of the house you mention then his assigning his nil rate bank of IHT is irrelevant ....

[mikey4444]

If you attempted to value your Mothers home at £15,000 rather £400,000, the Inland Revenue would be on to you like a shot ! That would be tax evasion, not tax avoidance !

Have a look at this IR site :::::

https://www.gov.uk/inheritance-tax/passing-on-home

Mum will be able to give away her home to you, although if she continues to live in it, she will have to pay a "real" rent.

Its complicated but as long as she survives for at least 7 years, then this gift will exempt from IHT....tapering relief is available, if she dies in years 1 - 7.

[mikey4444]

By the way, it might pay you to consult an IHT expert in this manner, as it would almost certainly save you an awful lot of money ! And that is my advice.

[fiction-factory]

Yes, there might be questions asked about stamp duty if that happened

[mikey4444]

FF.....not a case of might but of will !