MegaSack DRAW - This year's winner is user - rgwb
We will be in touch
What are the tax implications? She's considering paying off our mortgage and we pay her back. I could still save money by paying her off at a rate higher than she can get from a bank.
Can this work?
If its a gift you pay no inheritance tax on it as long as she lives for 7 years. I think the tax reduces each year to 0 on 7th year. So she pays your mortgage off and as long as she lives 7 years your ok.
NB This is what I understand to be the rule but I am no tax expert or accountant.
Can you not claim it on expenses?
Look here
[url= http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/InheritanceTaxEstatesAndTrusts/DG_10010612 ]http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/InheritanceTaxEstatesAndTrusts/DG_10010612[/url]
shouldnt be any inheritance tax issues as its a loan not a gift. i would have thought interest on repayments would attract income tax tho
If it is a gift then basically what Ed2001 says. Gift won't attract inheritance tax but if your mum dies within 7 years it could be taxable, or will come off the "nil rate band" that determines what she can leave tax-free.
If it's a straight loan and you're paying her the capital back with interest there shouldn't be any tax complications but would be worth speaking to a solicitor to get a loan agreement drawn up; lots of reasons doing this such as setting out what happens on death of you or your mother, ensuring it is properly structured as a loan and your mother doesn't end up as part-owner of your house or something unforeseen, and just to cover practicalities in case you fall out or whatever.
if it's something in between a loan and gift then probably worth speaking to solicitor as well for both tax and practical reasons.
Never mind the tax implication what about the affect on your liver.?
Hic...