inheritance tax

[balearic]

If I sell my house and move in with my daughter and give her all the proceeds of my sale for her to pay off her mortgage whether there will be any financial implications ie tax due. The property will raise less than the threshold for inheritance tax

[themas]

If the money from the sale is given to your daughter then it is what is called a potentially exempt transfer. This means that if you live for 7 years after you have given her the money it is excluded from your estate for inheritance tax. If you die within the 7 years then it is included in your estate, but inheritance tax will only be due if your whole estate is above the threshold at the date of death. Also, there is a sliding scale reduction in the amount of the gift which will be taxed if you survive for more than (I think) 3 years.

[Law Student]

If you haven't made gifts of more than �3,000 in any of the previous 7 years then the gift (of less than �300,000) that you are making will be free of IHT.

Themas is correct that this is a PET, but if you were to die within the next 7 years the value of the gift will be deducted from the 0% band available to the executors of the estate. The effect is that more IHT will be payable on the estate. The gift is not part of the estate and cannot be subject to IHT.

LS