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Gifting a house

Gemandcraig
Gemandcraig Posts: 38 Forumite
in House buying, renting & selling
Hi, So we want to buy a house and then after a few years gift it to our children. We dont plan to die within 7 years, they will each have a 25% share of the home, we will move out once they have gifted it from us. I think property is a good investment for long term and think this will help them in the next couple of decades financially.

Questions i have
- Is there any liabilities for tax?
-Do they need to be a certain age to be gifted a property?
-Is gifting a property legal?
-What if we continue to live in the home - Would we have to pay rent?
- Does the mortgage need to be fully paid off for it to be gifted?
Thanks
Gem

Comments

  • G_M
    G_M Posts: 51,977 Forumite
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    Gemandcraig wrote: »
    Questions i have
    - Is there any liabilities for tax? As you said, Inheritance Tax if you die within 7 years. Otherwise no (assuming you lived there as your main residence during your ownership. If not, Capital Gains Tax).

     -Do they need to be a certain age to be gifted a property? Yes. 18. If younger take advice on seting up a trust.
    -Is gifting a property legal? Yes, of course.
    -What if we continue to live in the home - Would we have to pay rent? Only if the owners choose to charge you rent. However there are other issues, since this would be a 'gift with reservation' (google it)
    - Does the mortgage need to be fully paid off for it to be gifted?
    Thanks
    Gem
    You cannot transfer ownership while there is a mortgage, unless the lender agrees which is unlikely.

    You'd need to pay off the mortgage. Theoretically, your kids could apply for a mortgage themselves to pay off yours. Assuming they qualify.

    My biggest concern for this plan is that shared ownership of a property, especially by 4 people, can create huge problems.
  • Mojisola
    Mojisola Posts: 35,557 Forumite
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    Gemandcraig wrote: »
    So we want to buy a house and then after a few years gift it to our children.

    they will each have a 25% share of the home

    What happens when one wants to get their money from the house?

    Who is going to live in the house? Do your children want to be landlords?

    What happens if one or two want to live in the house - will they pay rent to the other owners?

    So many ways this idea could cause problems for your children. :(
  • Keep_pedalling
    Keep_pedalling Posts: 16,618 Forumite
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    Sounds bonkers, if you want to make gifts to your children don't make it complicated and force them into being landlords, just give them cash to make their own choices.
  • GobbledyGook
    GobbledyGook Posts: 2,195 Forumite
    Do your children want to be part of a complicated four-way ownership?

    Have you thought about what will happen if one of your children needs to claim benefits? Or if they get divorced? Or if they want to sell and the others don't?
  • silvercar
    silvercar Posts: 46,955 Ambassador
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    Also, you would be denying them the opportunity to take advantage of first time buyer schemes and they would be clobbered for an extra 3% stamp duty on any property they buy.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    edited 16 March 2017 at 10:32AM
    Why do you think property is a good long term investment? Why do you think this property will be a good long term investment as you seemed to indicate in a previous thread that you don't think it will appreciate in value much.

    How do you envisage having money tied up in an illiquid asset helping your children?

    If this property will still be mortgaged when you're planning to gift some of the equity it's a non starter anyway.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    edited 16 March 2017 at 7:20AM
    I think property is a good investment for long term and think this will help them in the next couple of decades financially.
    =======

    How, specifically, do you envisage this helping them? As opposed to, for example, simply gifting them a sum each which will enable them to buy their own houses without complication?
    Or you running it as a BTL and remitting the profits to them each year and then selling it and giving them the proceeds in 20 years time? (is 20 years an appropriate time when you wish to give them this money? )

    You'd be potentially causing massive family rifts when some want to sell and others not.
    Forcing them to be landlords.
    Complicate their tax affairs.
    Lumber them with the ongoing cost of maintenance.
    Cause issues when some want to spend money on the house and others dont or cant afford to.
    Cause squabbles later on when they disagree about the value each own if some contributed more to maintenance than others.
    Forcing extra tax on them if they buy their own houses.

    As someone else said, this is a bonkers scheme.
    Well meaning no doubt, but bonkers all the same.
  • Keep_pedalling
    Keep_pedalling Posts: 16,618 Forumite
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    Having just read the OPs other thread re this house, I just can't see any point in this plan. At the moment they are a very long way from any danger of needing to think about IHT planning, so there are no tax advantages in doing this.

    The house will be purchased on a mortgage with very small deposit, so how are they going to be able to afford the bigger house they want without any equity being available from the house they are currently buying.
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