Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Nsar
    • By Nsar 12th Oct 16, 4:48 PM
    • 13Posts
    • 5Thanks
    Nsar
    Gifting a Property to Children
    • #1
    • 12th Oct 16, 4:48 PM
    Gifting a Property to Children 12th Oct 16 at 4:48 PM
    We own a house which is let out. There is no mortgage on it, we remortgaged part of our home to buy it.

    After all costs of finance and ownership, it produces c. £15k income pa

    We are seeking to understand if we can gift it to our 2 children who are students, to reduce their need to take on student debt.

    Is this possible?

    Thanks
Page 1
    • marliepanda
    • By marliepanda 12th Oct 16, 4:50 PM
    • 3,594 Posts
    • 7,071 Thanks
    marliepanda
    • #2
    • 12th Oct 16, 4:50 PM
    • #2
    • 12th Oct 16, 4:50 PM
    Just give them the income?
    Suvery Earnings 2016 - £188
    • cte1111
    • By cte1111 12th Oct 16, 4:52 PM
    • 6,853 Posts
    • 352,920 Thanks
    cte1111
    • #3
    • 12th Oct 16, 4:52 PM
    • #3
    • 12th Oct 16, 4:52 PM
    There is no gift tax in the UK, so you can give anyone whatever you like. However it might not be the most practical gift for 2 students. Would they live in the house or just become absentee landlords? If they eventually needed to sell, they would pay CGT on the gain, presuming that they did not live there.
    • Person_one
    • By Person_one 12th Oct 16, 4:53 PM
    • 26,014 Posts
    • 89,340 Thanks
    Person_one
    • #4
    • 12th Oct 16, 4:53 PM
    • #4
    • 12th Oct 16, 4:53 PM
    Possible, but not a good idea, you'd be giving them all the legal responsibilities of being landlords, plus the gift of extra stamp duty to pay when they do eventually buy their own first homes.

    Agree with the above poster, why not just give them the cash each month?
    • davidmcn
    • By davidmcn 12th Oct 16, 4:54 PM
    • 3,859 Posts
    • 3,434 Thanks
    davidmcn
    • #5
    • 12th Oct 16, 4:54 PM
    • #5
    • 12th Oct 16, 4:54 PM
    Do they want all the legal responsibilities of being landlords?

    Probably more difficult for siblings to reach consensus on everything.

    Would also complicate their lives when they want to buy their own properties (additional rate of SDLT/LBTT, no first time buyer privileges, etc).
    Last edited by davidmcn; 12-10-2016 at 4:56 PM.
    • Nsar
    • By Nsar 12th Oct 16, 5:03 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    • #6
    • 12th Oct 16, 5:03 PM
    • #6
    • 12th Oct 16, 5:03 PM
    The purpose of gifting the property is so that income between them is below the tax threshold.

    I'd continue to handle the fun & games of managing the property until such time as they wanted to take that on.

    I think losing 1st time buyer privileges is the deal breaker - I hadn't thought of that, thanks.
    • POPPYOSCAR
    • By POPPYOSCAR 12th Oct 16, 5:03 PM
    • 9,442 Posts
    • 19,315 Thanks
    POPPYOSCAR
    • #7
    • 12th Oct 16, 5:03 PM
    • #7
    • 12th Oct 16, 5:03 PM
    Yes you can.

    If this property has increased in value since you bought it, you(not them) may be liable for Capital Gains Tax, even if it is gifted and no money changes hands.

    As you have rented it out there is formula for working out your liability which will be less than if you had not.

    If it does give rise to CGT do you have sufficient capital to pay it?
    • Nsar
    • By Nsar 12th Oct 16, 5:05 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    • #8
    • 12th Oct 16, 5:05 PM
    • #8
    • 12th Oct 16, 5:05 PM
    We only bought the house in Jan so whilst there has been some CG (based on informal study of the local market) it wouldn't be a problem.
    • G_M
    • By G_M 12th Oct 16, 5:37 PM
    • 37,060 Posts
    • 40,987 Thanks
    G_M
    • #9
    • 12th Oct 16, 5:37 PM
    • #9
    • 12th Oct 16, 5:37 PM
    So this is really a way to reduce the tax liability?

    Are they going to live there? If not, they will potentially have Capital Gains Tax to pay eventually. Plus as sid, hey'll miss out on HTB ISAs etc.
    • Nsar
    • By Nsar 12th Oct 16, 5:42 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    That's correct (about the tax).
    • Hoploz
    • By Hoploz 12th Oct 16, 5:45 PM
    • 3,048 Posts
    • 2,698 Thanks
    Hoploz
    Are they students in the same area? Buy them instead a house to live in and share with others perhaps for an income. Or if they are not together then buy them a house each.

    That way you're saving them paying rent elsewhere and costs can be covered by renting rooms to their friends.

    Really it wouldn't matter whether you were the owner or they were, they'd still be saving the rent even if you took the rental income from the other rooms to pay a mortgage.
    • Nsar
    • By Nsar 12th Oct 16, 5:49 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    Sadly I don't quite have the funds to buy them a house each!

    The rent elsewhere is a bit of red herring as it's cost neutral.
    • Hoploz
    • By Hoploz 12th Oct 16, 5:57 PM
    • 3,048 Posts
    • 2,698 Thanks
    Hoploz
    Sadly I don't quite have the funds to buy them a house each!

    The rent elsewhere is a bit of red herring as it's cost neutral.
    Originally posted by Nsar

    > That may be so but you could sell or mortgage the spare property you already have to finance it along with the future rental income. It's pretty normal for people letting properties to have mortgages. This is a choice but you were asking of ways to reduce their debt - this would achieve that by reducing their outgoings.

    > I don't know what you mean by the second bit
    • Nsar
    • By Nsar 12th Oct 16, 6:03 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    Getting a mortgage on the 2nd property is something we are looking at as well yes. I think we can get 70%of the value which we'd use to buy another rental property.

    What I mean was wherever our children live it's more or less cost neutral. If they have a room in a property we own, we lose that income. If they live elsewhere they pay rent but we get rent. Outside London, student rents don't really vary that much in our experience
    • Person_one
    • By Person_one 12th Oct 16, 6:24 PM
    • 26,014 Posts
    • 89,340 Thanks
    Person_one
    I'd continue to handle the fun & games of managing the property until such time as they wanted to take that on.
    Originally posted by Nsar
    They would still be the ones legally responsible and on the hook if anything went wrong though, and what if they never want to be landlords?
    • Nsar
    • By Nsar 12th Oct 16, 6:39 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    It's bit hypothetical now as I'm persuaded that the loss of 1st time buyer benefits and access to the long term savings scheme probably outweigh the tax benefits, but to answer your question, the risk of something going wrong is there irrespective of ownership and I'd deal with it.
    • Person_one
    • By Person_one 12th Oct 16, 6:48 PM
    • 26,014 Posts
    • 89,340 Thanks
    Person_one
    It's bit hypothetical now as I'm persuaded that the loss of 1st time buyer benefits and access to the long term savings scheme probably outweigh the tax benefits, but to answer your question, the risk of something going wrong is there irrespective of ownership and I'd deal with it.
    Originally posted by Nsar
    What if the thing that goes wrong is that you aren't there to deal with it?
    • Nsar
    • By Nsar 12th Oct 16, 6:53 PM
    • 13 Posts
    • 5 Thanks
    Nsar
    Blimey....What if we never did anything for fear of something going wrong?

    If I've gone under a bus, they'd know who to call.
    • lydriver
    • By lydriver 12th Oct 16, 6:59 PM
    • 251 Posts
    • 32 Thanks
    lydriver
    ghostBUSters
    • Person_one
    • By Person_one 12th Oct 16, 7:19 PM
    • 26,014 Posts
    • 89,340 Thanks
    Person_one
    Blimey....What if we never did anything for fear of something going wrong?

    If I've gone under a bus, they'd know who to call.
    Originally posted by Nsar

    It just seems more like a burden than a gift for two university age young people, and with property, especially rented out property, you do have to consider various possibilities.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

731Posts Today

5,708Users online

Martin's Twitter