Transfer of property from parents to son with intention to coninue living at property

i thought it did work? my granda has done something similar, maybe he gifted it to the family. what other possibilities are there?

Margaretclare is largely right.

1) If the whole property is gifted, the value of the property will be added back into the value of their estates when calculating IHT. This is irrespective of how long ago the gift was made - unless you pay the rent and they pay the income tax on it.
2) A local authority can ignore the transaction without limit of time if they consider that it was done to avoid paying long term care fees.
3) If you become involved in a marital dispute/bankruptcy their home is at risk.

That said, because you live there, if they give you a reasonable share, let's say a third and survive for seven years then that will work, and it may be a good idea if they are concerned about inheritance tax. It would be quite straightforward to arrange and wouldn't even require a solicitor - but do take advice.

Remember also, that if you move out or buy another property there could also be Capital Gains Tax to pay on the gain of the property's value.

I think if IHT is an issue for your parents, they should also obtain professional advice about their wills. A good willwriter will assist with the above at the same time. PM me if you require any help.

overworked_underpaid wrote: »

My parents want to sort out their finances while they are still alive.

Obviously - it's too darned late to sort out their finances once they're NOT alive!

As they don't work and have any income, I am supporting/caring for them. I pay all the bills and household expenditure as they are not able to do so.

But you just said they want to sort out their finances while still alive, and then you say they have no income?

They must have income of some sort - retirement pensions, attendance allowance (if they need 'caring').

If they give their house to you they will have to pay you rent on it, as I said before. You will then declare that rent as income on your tax return.

I should explain - we're a pair of wrinklies but, unlike your parents, we DO have income, retirement pensions each etc. You say they're not able to pay all the bills and household expenditure - most retired people on pensions have to pay bills and normal house expenses?

We do quite nicely on pensions income and while I agree, many older people are poor (often women in the older age-groups living alone) some of us even manage to save.

I would agree that EVERYONE needs to sort out their finances and leave everything in apple-pie order. No one knows what can happen tomorrow, next week or even in the next 5 minutes. I still don't understand what your parents hope to gain from this.

There is also a risk to them - if the house becomes yours, you marry and divorce, the house then becomes part of a divorce settlement. Or if you go bankrupt. These are all scenarios that have happened. Your parents could be very vulnerable.

Margaret

Because they cannot make a gift and reserve a benefit from it. They can make a gift of a smaller share of the property.

In my usual cack-handed and non-expert way, this is what I've been trying to say. You cannot give something away and reserve a benefit from it. You can't give someone a Christmas present and say 'oh, but I really want to use it for myself. I want to pretend I've given it to you, but really I haven't'.

The last sentence 'they don't want to rely on government hand-outs....' is quite offensive to those of us whose main income is retirement pension. We worked for it and paid for it over many years and we're entitled to it. Same with your parents. They are entitled to their retirement pensions, and if they need 'care', then either or both of them is entitled to attendance allowance. This is not a 'hand-out', it's an entitlement.

We could say the same thing. DH's son is a high-flyer who is doing very very well. But neither DH or I would take a thing from him, nor from our daughters either. It's called self-respect and independence. And we are not about to give our house away to anyone else either.

I would agree about wills. Everyone should have a will, and it needs to be kept up to date, say every 5 years or so. Things can change.

Margaret