To think my children have no right to inherit £1m free of tax?

[Gasp0deTheW0nderD0g]

My husband and I had the good luck to get onto the property ladder in London in the 80s when people on ordinary incomes could quite easily buy a family home. By sheer chance our fairly ordinary family home is now worth an eye-watering amount of money. No way could we buy it ourselves now. Our children will definitely not be able to buy their own homes unless they get jobs on far, far above the average salary and/or we re-mortgage or act as guarantors.

The BBC says that George Osborne is about to announce that inheritance tax on family homes worth up to £1m is going to be abolished. Why? Well, obviously to win votes - but from a moral perspective, why should my children inherit £1m and pay no tax on it?

"YABU, not because you disagree with it. But because you can do something to prevent it. Sell up, by a smaller house and donate the rest to charity. "

That's my point although you made it better Teabagbeforemilk.

It's like the people who used to be quizzical about the fact that they got child benefit when they didn't need it. It never seemed to occur to them not to claim it.

(And don't get me started on those bitching about whether benefit claimants are really in need of hand outs whilst also happily claiming child benefit)

pag I couldn't agree more. We dont claim it any longer. Never have for ds. When dd was born we needed it. Now we don't. I don't agree that everyone should get it (also don't agree that the changes to this were implemented fairly). we stopped claiming it before the changes

Some people seem to be misreading what I've written, or making incorrect assumptions. I have no problem at all with leaving my estate to my children. What I don't understand is why there should be any special treatment for inheriting a family home as opposed to other windfalls. Why shouldn't a proportion of the inheritance go back into society to benefit other people? It happens with earned income, it happens with large capital gains on shares, it happens with VAT and stamp relief - why not inheritance of the family home?

Now I think about it, less and less property in the UK is being bought out of taxed income.

Buy in the 80s, pay off most of the mortgage under MIRAS: not out of taxed income.

Watch house price skyrocket well above inflation: not out of taxed income.

Leverage ludicrous house price to acquire buy to let. Offset mortgage payments & expenses against rental income: pay no income tax. (Actually, this house has been bought out of taxed income - the tenant's! Not the LL's who gets to own the house).

Come retirement, downsize into BTL. Cash in main residence. Not taxed as main residence.

Move into BTL, which the tenant has obligingly bought for you and you've paid no tax on.

Fantastic set-up! If you happen to be a SE property-owner of a certain age.

Not so much if you're disabled, poor or elderly without owning a central London goldmine. You know, someone who might need to use services provided by those taxes?

I think YABU.

1. You purchased a property at a very modest price in an area you could afford. Fact.
2. That area, over time has become desirable over time and prices have increased making your property more valuable. Fact.
3. Your children, as with most of their generation and those after them are unlikely to ever be able to afford a property in a desirable area such as yours, no doubt with good schools, good transport and good policing too. Fact.

What kind of parent would feel any doubts about helping their children and grandchildren benefit from their good fortune?

If I inherited the home my father bought some years ago at a fraction of the price that it's worth today I would be forced to sell up as the IHT as it stands is so prohibitively high. I would love to live in it and despite both me and DH working hard in good, full time jobs we cannot envisage a time that we will ever be able to afford a property otherwise.

To want to deny your children this privilege seems cruel.

Of course there wouldn't be a perceived need for new iht rules if property prices in some parts of the country weren't completely ridiculous. That is the problem that the government needs to tackle. (Not sure who that government would be though).

You phrased your OP, wrong, Gasp.

It's allowing posters to pretend this is a personal issue.

They know it's not.

Read what I've written, Kinsman! The key phrase in the thread title is free of tax. That's what I object to.

As for the area - good transport yes. Good policing - well, there is the largest police station in Europe nearby and it is much needed... Good schools? In some cases, yes. What relevance does any of that have to whether we should tax the family home?

Pausing, it's fascinating to see how many people have seen this as a glorious chance to accuse another person of envy, resentment, being rich etc etc.

We really need a head/desk/interface emoticon!

But if you object, you can do something about it. No matter how it's explained, you can do something.

I absolutely agree with your point, OP. YANBU.

It honestly isn't allowing me to 'pretend it's a personal issue'
It read as a personal issue.
I don't have any problem with thumping great taxes for the rich. And it's not envy either- I'm well off enough to pay them.

It's how the op read to me. [shrug]

Perhaps write a clearer op although maybe it wouldn't sit in Aibu as well?

Yes, I particularly liked the one accusing you of resentment!

Normally those go "Chah! Politics of envy! You're obviously don't own a house yourself!" But you'd stopped that one off, so they had to go for "resentment... of... erm... dunno."

Because, you know, having an opinion about what might be good for the country as a whole, even when it conflicts with your self-interest: that can't happen.

a) do not assume that only adult children inherit. Finding ways for DC to stay in their existing home, or funding a relative to move might be crucial.

b) you're talking about - not a mansion - but a 3/4 bed terrace in zone 2.

c) if you want the IR to benefit because you think the policy is wrong, you can still write a payment to them into your will

I thought it was fairly obvious I was using my family situation, which isn't that unusual, to make a general point. Clearly not.

Marrqkashg your post makes me so cross! Saying young people don't work as hard as you did so can't afford a home? blatently ignoring the econmic reality of the past thirty years.

And no, your taxes don't fund your care. You have to do that yourself.

I did wonder about your posts, Pag, as you're not normally like that.

As you say, cross-purposes with fuzzy OP.

I think the rational in linking this rise in IH to houses is they can justify it by saying it is because of house price rises. So lots of people are brought into paying IH just because the own a normal family home. I think once the increased threshold has been established they will eventually remove the link to property.

The only reason I can see for this change is that it benefits those caught in the middle. People who don't own houses etc don't pay IH and those rich enough to already employ accountants and lawyers to manage their affairs also don't pay it.

Merrymouse yes the plane will be taxed on death but my question is why incentivise people to buy a plane in the 7 years before death rather then make gifts?

Because if you make gifts before death, assets are leaving the estate and reducing its value. The 7 year rule is designed to stop people giving everything away and avoiding iht. The purchase of a plane just exchanges one asset for another.

The current threshold is £650k. You can already inherit 100% of that without tax. The proposal moves the new threshold to £1million. This move will help 5% of the population (project to rise to 10% of the population in next Xmany yrs). Inheriting more money means buyers will have more money to buy & property prices will be pushed up.

Abolishing tax relief on pensions means less investment into things that create jobs.

So the proposal means fewer new jobs and higher house prices.

YADNBU.

On the point about older people being reluctant to downsize, the BBC news has this:
"Since the election, it is reported the plan has been tweaked so that where couples have "downsized" to a smaller property after their children have left home, the allowance will still apply to the old family home"

Yes, Iconic, but that doesn't make any sense to me. No matter where the inheritance comes from, or how irrational it is that it has come into existence, it does exist. Middle-aged people who have done nothing whatever to deserve it are inheriting six figure sums and once George puts his change into effect will lose none of it in tax.

The government would be better employed trying to do something about house price inflation and ensuring that everybody in employment is on a living wage. Not holding my breath on that one, though!