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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15707
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife and I have recently taken out mortgages on 4 Buy To

Customer Question

Hi. My wife and I have recently taken out mortgages on 4 Buy To Let properties that we rent out. The final property we purchased from my Mother (completed 4 weeks ago), with a gifted deposit from her. However my mother is now saying that as she didnt really need the cash (earns nothing in the bank, and she has various properties) she wishes she had just just gifted us the entire property so we didnt have to pay mortgage payments. She is now suggesting that she gives us an early inheritance of the amount she received from the mortgage company, paid into our bank account, and we in turn pay off this mortgage, pretty much before it has begun. Are there any issues with doing this?/Thanks.Daniel
Submitted: 1 year ago.
Category: UK Tax
Expert:  Tony Tax replied 1 year ago.

Hi.

If your mother makes a gift to you of the cash she received for the property, then that will be a potentially exempt transfer which will remain as part of her estate for Inheritance Tax purposes for seven years after it is made. Howver, the potential IHT charge starts to taper away after three years as you will see here. You should remember that your mother may have CGT to pay as a result of the sale of the property to you so she may need some of the cash you paid via your mortgage for it to settle that liability.

As far as you are concerned, you should check with your lender whether there are any early moergage redemption penalties that you may have to pay.

I hope this helps but let me know if you have any further questions.

Expert:  Tony Tax replied 1 year ago.

Hi.

If your mother makes a gift to you of the cash she received for the property, then that will be a potentially exempt transfer which will remain as part of her estate for Inheritance Tax purposes for seven years after it is made. Howver, the potential IHT charge starts to taper away after three years as you will see here. You should remember that your mother may have CGT to pay as a result of the sale of the property to you so she may need some of the cash you paid via your mortgage for it to settle that liability.

As far as you are concerned, you should check with your lender whether there are any early moergage redemption penalties that you may have to pay.

I hope this helps but let me know if you have any further questions.

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