Part own/ part rent house owned by my mum and I. Can we reduce what rent we pay to my mum so I can save the money to avoid it getting taxed when she passes?
Thought I’d post this here to see if anyone has any insight.
My wife and I share a house with my mum and have done for the last twenty years. It’s a big detached house that has two separate sides to it linked by doors, so it’s one house and not registered as two separate properties but operates as two for us (two kitchens, lounge areas, etc.) I own a third of the house and the property will be left to me in her will. We pay all bills alongside rent to her on a monthly, direct debit basis.
My mum is constantly stressing about inheritance tax. I did suggest that we potentially reduce the payment we make to her by £200 a month and that I save it in my ISA so it doesn’t get gobbled up by inheritance tax, however, she’s insistent that wouldn’t work and that her bank balance would be scrutinised when she passes and that any reduction in what I pay her would be queried. I’m essentially wondering whether she is correct in this assumption or whether a reduction in what we pay a month would be ok, specifically as I own part of the property anyway and that it’s a family rent agreement between us.
If anyone could offer any advice or knowledge around this it would be tremendously appreciated. Many thanks!
EDIT: Thanks for the replies, people! Much appreciated! I’ve looked at this app way too much today for my liking so I’ll park it here but thanks to everyone who gave some clarification and food for thought! Cheers!