tax implications on transfer of property from parent to child

yauser

Hello,

My father is thinking of transferring his property to mine and my brother's name. I think he is thinking ahead and wants the property to go to us and not the government.

The property is only worth around 100K so i believe we would be free from IH. I quickly asked my Financial Advisor if he thought this a good plan. He said No, since the government changed the rules around 4 years ago and that my father could no longer live in the property rent free...that we would have to charge him a current market rent and pay tax on the income. Does anyone know if this is correct?

Also i own my own property and am self-employed. What tax implications would it have owning a 2nd property?

Any advice would be most appreciated.

Many thanks

Lillee

sloughflint

Yes,allsorts of tax issues/problems:
CGT as the home would not be your primary residence.
Income tax on the rent.
Lack of security for your father in the event of bankruptcy or divorce or death of his children.
Deprivation of assets issue should he ever require care.

RayWolfe

yauser wrote: »

I think he is thinking ahead and wants the property to go to us and not the government.

What does he mean by this or what do you think he means by this? Why does he think it would be taken by the government? There are a lot of myths in this area, perhaps we can clear them up for him.

yauser

Thanks for your replies.

I think my father is thinking that IF ever he had to go into a home, he would like his property to go to us and not be eaten up by care home fees.

Do any of you know if it is true whether a parent can live in the property rent free if they transferred the property to their son/daughter.

would it be better if we added our names to the deeds...could this be a way around charging dad rent...could the local authorities take his home if our names were on the deeds?

Any advice would be appreciated.

Lillee

CLAPTON

Should the situation arise, the council will almost certainly take the view that he deliberately 'deprived himself' of assets to avoid paying his own way. They can force the sale of the house to reclaim the money.


When you come to sell the house you will be liable to capital gains tax.. whereas if he simply left it to you in his will no tax would (probably ) be payable.

If you die then the property will be inherited by your next of kin who may wish to sell the house

If you are married and get divorced etc them the value of the house may figure in any settlement figures.

If you get into debt, your debtors may be able to force the sale of the house.

it needs thinking about carefully.

Scott_37

A number of years ago our parents transferred the deeds to their house to my brother and my self.

Dad died four years ago and mum is still living in the house. Should we transfer some of the ownership to her to avoid capital gains tax. I'm sure that I saw lawyers advertising this sort of service a few years ago. Any advice gratefully received

RayWolfe

If you do that you will incur CGT.
I hope you are collecting rent and paying tax on that rent.
You seem to be in the worst possible position.
I would seek professional help immediately.