UK Tax Questions? Ask a UK Tax Advisor for answers ASAP
This is the situation as it will soon be. Nothing has happened yet. Currently I own a house. House A. I will take a mortgage on house A and got a second house House B. My mother will live in House A. My Father will live in House B. I don’t really want either house, but I have to cater for my parents. My father will ‘manage’ the paperwork of paying the mortgages since I am rarely in town. IE collecting the ‘rents’ from him and mum and paying the mortgage company. The way I understand it is that my parents are allowed to make me cash gifts (which I effectively use to pay the mortgage) which will be taxable upon their death as inheritance tax. So if mum or dad dies, then either of these cash gifts (mortgage payments) they make for me, will be taxable under inheritance tax going back 7 years with a tax free bracket of £325,000. So in effect, given they’d be gifting me only £6k a year each, then there would be no tax liability. Is this correct and would there be any further tax burden? Usually I live far away in my own rented home. Occasionally, between jobs, I may stay at House A or House B for a few weeks but neither is really my home. One last thing, there is a chance I may take a job close to House A and make House A my primary residence.
One last thing - we are in England.
Isn't that what I am doing?
I am not sure what word to use to label what the payments would be - the mortgage payments come due and my parents will cover them.
Either I could pay them myself and my parents could 'gift' me a corresponding amount each month, or they could just cover them for me with the mortgage company directly as a 'gift', we could call it a gift, call it rent etc.