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My sibling and I were fortunate several years ago to end up having our grandparents property transferred from the beneficiaries directly to us. We have been renting the property since then (in england).
Our long term tennent recently passed away so the plan that's gathering momentum now is to renovate the property for our one surviving parent (Mother) to live in and then sell their current home once the other place is move in ready...or potentially rent the current primary residence out.
The home has obviously already appreciated in value since it was transferred into our names so if we sell it now there would be capital gains tax to pay. The renovation would be funded by our parent so adding further value to the home so I'm unsure what the capital gains tax implication is here with the improvements. We would probably "fair market value rent" the renovated home to our Ma rather than sell it to her using the proceeds of the primary residence. That the scope of the renovation seem to have gotten a little enthusiastic and proposed budget likely pushes past the current ceiling price of comparables is another conversation but possibly relevant.
Then I'm unsure what the proceeds of the current primary home sale would do but as I understand it, the estate currently doesn't pass the IHT threshold and theres fair trust and a desire to help us financially when we need it with young kids rather than too late to benefit them
I'm sure there is a best case strategy here, but I've no idea where you go or who you ask for advice on inheritance and financial matters. Other financial planning relationships have proven to be almost a complete waste of time and failed to realise any potential.
I think we're in this financial window where there's not enough money at play for us to be of any interest to bigger financial planners, but we're comfortable enough to realise that being smart now could really make a big difference down the road and a misstep now could be relatively costly.
Any input gratefully received.
You're sat on enough cash between you to pay for a proper financial planner.
Do it. They're worth it.
.
I'm no expert but just pay an accountant to look at some options?
As stated....see a professional
I'm a little confused as usual! So this is the situation?:
The property you"re currently renting out is going to continue to be rented out but this time to your mum.
She's selling her primary residence, as she will no longer need it, and is using some of the money to renovate the/your rental house.
Her estate is under the current inheritance tax threshold.
So she's not going to pay CG as she's selling her primary residence. I would have thought that the money she spends on renovating your rental property would be treated as a gift with the associated 7 year rule.
You're not going to pay CG until you sell or transfer the rental house.
As above speak to a pro!
You've got an overhanging CGT liability on this house anyway, if you sell it to your mother (using the proceeds of her CGT-free house sale, you can defer her payment if that's convenient, but the CGT will be due in 90 days!) that will crystalise the gain and simplify matters for the future. It then becomes her primary residence and future gains are CGT-free both as it's her primary residence and also due to the fact that it will presumably in time be inherited at a new base value, presumably also without much if any IHT liability (eg assuming her estate is under a million and your father's estate passed to her in the recent past). Even if just over a million, it's only the excess that's taxed, and it's also allowed to give some money to charity if you are so unusually rich as to be in this position.
But you can probably avoid paying the CGT now if the added complication is worth it to you. The house will however be due CGT at some point unless you hold on to it for ever or move into it and live there as your own primary residence at some point in the future.
What i would do:
sell mothers house and have her rent yours at market rate
let her renovate however she likes
you might miss out on the the family home allowance downsizing addition on her house if she doesn't buy another, but if you're not troubling the iht threshold it doesn't matter
actually i would get some professional advice, you'll only need like an hour of their time for a chat. Some people will say its best she gives you everything now before there's any indication or expectation of needing care.