Thoughts On Releasing A Bit Of Cash

[Thisoldbird]

I want to help a very close family member by releasing a sum of money from my property. The person gets to inherit it all at the end of the day..but, like many times are hard just now. Here I am sitting in a mortgage free property watching someone very dear to me struggle.

I don't want to go down the equity release road..can I do this if so advise how best to approach it. I'm mid 80s have all i need..anyone have experience of this please.

[Peter Pedant]

Don't go down equity release
and the only other way is to
Down-size and give em da loo-lah
( all right in English - sell: buy smaller and give what remains to dear one. )
Your only issue is that this will be counted as part of the IHT tax free bracket UNLESS you survive 7 y ( unlikely if you are 85)

[Peter Pedant]

or DDDDIIIIIIEEEEE! but I am not allowed to write that probably

[ToraToraTora]

^^^^ PP really?

[elliemay1]

Could you perhaps rent out a room and give them the cash or could you have them to live with you?

[Zacs-Master]

Bit of a minefield this situation.

There would, of course, be Inheritance Tax to pay by your close relative as it's is payable by any individuals who have received money or property as gifts, upon your death (if you die within 7 years of gifting the money).

However under your 'annual exemption' you can give away a total of £3,000 worth of gifts each tax year without them being added to the value of your estate. Any unused tax-free amount will be carried over to the next year and added to the existing threshold. This means you may be able to give a larger amount during that period.

You could You can make regular payments to help with another person’s living costs. There’s no limit to how much you can give tax free, as long as you can afford the payments after meeting your usual living costs.
you pay from your regular monthly income.
These are known as ‘normal expenditure out of income’. and include:
paying rent for your child
paying into a savings account for a child under 18
giving financial support to an elderly relative
If you’re giving gifts to the same person, you can combine ‘normal expenditure out of income’ with any other allowance, except for the small gift allowance.
https://www.propertysolvers.co.uk/articles/how-much-money-can-be-legally-given-to-a-family-member-as-a-gift/


Whatever route you go down I would strongly advise the services of a Solicitor to draw up an agreement.

[Thisoldbird]

I should have added I downsized some years ago and not enough involved for inheritance tax..

PPP I'll die soon enough thank you !!

[barry1010]

The only way to release money from your property is to re-mortgage which means you will be repaying it every month.
Equity release is a mortgage that is paid back when you die or go into full time care.
Keep in mind that any money gift you give your relative could impact on any benefits they are in receipt of.

[Peter Pedant]

There would, of course, be Inheritance Tax to pay by your close relative as it's is payable by any individuals

erm it is set against the £325 000 freebie ( er IHT allowance )
and THEN it is counted with a discount on how longbefore

[Zacs-Master]

There are 2 forms of Equity Release:

1. Lifetime mortgages where you take out a mortgage secured on your property provided it's your main residence, while retaining ownership.

2. Home reversion where you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments.

[Zacs-Master]

'erm it is set against the £325 000 freebie' I took that as a given.

'and THEN it is counted with a discount on how longbefore'

Indeed. Gifts given in the 3 years before your death are taxed at 40%.

Gifts given 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.

Taper relief only applies if the total value of gifts made in the 7 years before you die is over the £325,000 tax-free threshold.
https://www.gov.uk/inheritance-tax/gifts

I said it was a minefield.