My mother lives in the Canary Islands, and wholly owns a house since my dad passed away. She wantsto put it in our joint names to save me hassle when she passes. The same applies to two bank accounts, one current and one savings. I am concerned this will create a tax liability for me in the UK which I cannot afford. If she puts the house in mine or our joint names, what happens for tax purposes? It is worth about £120,000 at the moment.
Arthur Weller replies:
If your mother is resident in the Canary Islands (i.e. nonUK resident) and the property is in the Canary Islands (i.e. not in the UK) then there will be no UK tax for her to pay when she puts the house into your name, or into joint names. There certainly will be no UK tax for you to pay. The inheritance tax (IHT) situation when she dies, assuming again that the property is not in the UK, is dependent on her IHT domicile status. But since the house is only worth £120,000, unless she has other assets which bring her total estate to over the IHT ‘nil rate band’ of £325,000, you will not have to worry about UK IHT when she dies, even if she is ‘deemed’ UK domiciled for IHT purposes.