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  • FIRST POST
    • Gemandcraig
    • By Gemandcraig 15th Mar 17, 9:07 PM
    • 36Posts
    • 4Thanks
    Gemandcraig
    Gifting a house
    • #1
    • 15th Mar 17, 9:07 PM
    Gifting a house 15th Mar 17 at 9:07 PM
    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
Page 1
    • G_M
    • By G_M 15th Mar 17, 9:27 PM
    • 42,337 Posts
    • 49,185 Thanks
    G_M
    • #2
    • 15th Mar 17, 9:27 PM
    • #2
    • 15th Mar 17, 9:27 PM
    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
    Originally posted by Gemandcraig
    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
    • By Mojisola 15th Mar 17, 9:31 PM
    • 28,655 Posts
    • 72,979 Thanks
    Mojisola
    • #3
    • 15th Mar 17, 9:31 PM
    • #3
    • 15th Mar 17, 9:31 PM
    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
    Originally posted by Gemandcraig
    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
    • By Keep pedalling 15th Mar 17, 9:53 PM
    • 4,106 Posts
    • 4,470 Thanks
    Keep pedalling
    • #4
    • 15th Mar 17, 9:53 PM
    • #4
    • 15th Mar 17, 9:53 PM
    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
    • By GobbledyGook 15th Mar 17, 10:08 PM
    • 2,093 Posts
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    GobbledyGook
    • #5
    • 15th Mar 17, 10:08 PM
    • #5
    • 15th Mar 17, 10:08 PM
    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
    • By silvercar 15th Mar 17, 10:25 PM
    • 36,210 Posts
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    silvercar
    • #6
    • 15th Mar 17, 10:25 PM
    • #6
    • 15th Mar 17, 10:25 PM
    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.
    • Pixie5740
    • By Pixie5740 15th Mar 17, 11:44 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    • #7
    • 15th Mar 17, 11:44 PM
    • #7
    • 15th Mar 17, 11:44 PM
    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.
    Last edited by Pixie5740; 16-03-2017 at 9:32 AM. Reason: typo
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • AnotherJoe
    • By AnotherJoe 16th Mar 17, 6:18 AM
    • 7,677 Posts
    • 8,291 Thanks
    AnotherJoe
    • #8
    • 16th Mar 17, 6:18 AM
    • #8
    • 16th Mar 17, 6:18 AM
    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.
    Last edited by AnotherJoe; 16-03-2017 at 6:20 AM.
    • Keep pedalling
    • By Keep pedalling 16th Mar 17, 9:03 AM
    • 4,106 Posts
    • 4,470 Thanks
    Keep pedalling
    • #9
    • 16th Mar 17, 9:03 AM
    • #9
    • 16th Mar 17, 9:03 AM
    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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