How can we reduce inheritance tax on my mother's property?

My sister and I would like to be joint owners of my mother’s house to reduce liability on her estate

Q Would I, together with my sister, be able to become a joint owner of my mother’s property so that the house wouldn’t be counted as part of her estate for inheritance tax purposes? Is this possible and if so what is the best way to go about this?
MN

A Yes it’s perfectly possible for you and your sister to become joint owners of your mother’s house (assuming that’s what your mother wants to happen). But unless you and your sister go and live in the house with your mother – and carry on living there until her death – the whole of the value of the property rather than just the value of your mother’s share will be taken into account when working out how much inheritance tax is due. Giving away a part or the whole of something – whether it’s a property or a valuable antique painting, for example – while continuing to benefit from it makes it not a proper gift or a “gift with reservation” in the eyes of HMRC and so the whole of the property is included in the valuation of her estate when she dies. So if your mother’s estate is worth more than the £325,000 nil-rate band if she dies in the 2019-20 tax year, there will be a tax bill of 40% of the amount over £325,000. However, if your mother’s will says that the family home is to be left to you and/or your sister (or other direct descendant), the nil-rate band goes up to £475,000 (£500,000 in the 2020-21 tax year) thanks to the “residence nil-rate band” or “family home allowance” introduced in April 2017.

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