Best way to 'Give house to kids?'

snatch69

some advice please, I want to know the best way of signing over, giving or selling our house to our children so as to avoid any tax penalties if possible, thanks

margaretclare

And where are you going to live when you've signed away/sold/given your house?

There is no 'best way' to do this and there are numerous pitfalls for anyone considering this course of action. You're still going to need a roof above your head for the foreseeable future, aren't you?

Aunty Margaret

rrwfotr

Couldn't you just transfer the house to their names without them knowing...thus passing it over without their knoweldge.

Bossyboots

rrwfotr wrote:

Couldn't you just transfer the house to their names without them knowing...thus passing it over without their knoweldge.

Um, no you can't. The transfer has to be signed by both parties for a start.

This still leaves the OP vulnerable to losing the property at a later stage if the children turn nasty.

Apart from the pitfalls, this would also be considered deliberately getting rid of assets so may not achieve what the OP intended anyway.

lisyloo

What are you trying to acheive?

You cannot give away assets to get benefits e.g. long term care.
HOwever there are mechanisms (such as trusts) to avoid inheritance rax.

Perhaps if you can explain what you trying to acheive then we can give you better advice.

snatch69

We have worked long and hard to buy the house, as we get older there is a chance one or both of us may get taken into care and the house sold to pay for this , if we no longer own the house it cant be taken off us, its a sad state of affairs but the house is our childrens inheritance and we do not want to loose it back to the state, the goverment takes from us all our lives, we see little in return!!
could we seel the house to them and then rent it off them?
im sure there must be loop holes

Bossyboots

snatch69 wrote:

We have worked long and hard to buy the house, as we get older there is a chance one or both of us may get taken into care and the house sold to pay for this , if we no longer own the house it cant be taken off us, its a sad state of affairs but the house is our childrens inheritance and we do not want to loose it back to the state, the goverment takes from us all our lives, we see little in return!!
could we seel the house to them and then rent it off them?
im sure there must be loop holes

The Government are working hard to close the loop holes. They are even chasing up these sorts of transactions from years back now. Where a house has been transferred to offspring by the parents are still living there, then it is deemed not to be an absolute gift and inheritance tax will apply. The house can still be taken by the DSS if it seems that it was an attempt to avoid care costs.

If you sell the house you will then have the capital which will fall into the same issues. Also, if they already own a home they could end up paying Capital Gains Tax.

You need to take some proper inheritance planning advice on how to minimise this liability.

margaretclare

snatch69 wrote:

We have worked long and hard to buy the house, as we get older there is a chance one or both of us may get taken into care and the house sold to pay for this , if we no longer own the house it cant be taken off us, its a sad state of affairs but the house is our childrens inheritance and we do not want to loose it back to the state, the goverment takes from us all our lives, we see little in return!!
could we seel the house to them and then rent it off them?
im sure there must be loop holes

You say there is a *chance* one or both of you may get taken into care. It's a chance - no more. It's still only a minority of older people who end up in permanent residential care. Most people manage to live out their lives in their own home, even if they need a package of care coming in to help them remain independent.

If one of you goes into residential care the house cannot be touched as long as the other person is still living in it.

Incidentally, we've all worked long and hard for our homes (in our case, more than a century at work between us) but not all of us are worrying ourselves sick about something that may never happen.

Aunty Margaret

bobmccluckie

Could those who have replied with reference to inheritance tax please read the question!

As for the question I understand that any action taken to remove a charge on property to pay for local authority care can be simply ignored by the local authority.

However as long as one partner is still living in the property no action can be taken to enforce a sale.

Finally why shouldn't people pay for the care component of their costs. Why should the tax payer pay just so that the middle class can inherit?

seaniboy

its a sad state of affairs really, i mean if you have savings yes you should pay for care component of residential care so upper classes cannot abuse the system, similar to HB & CTB anything over £8000 affects your claim this should be applied to this senario but selling your home which in many cases is the only inheritance to your children to pay for your care is a joke - I mean are we not all paying tax towards our "care" in society ?

I have a question though...

If one partner remains in the house they cannot enforce this but....

what if you have children/friend permanantly living at home with you ? can the council enforce the sale and thus make you/them homeless?

I think in Scotland we get free care if you are over 65 anyhow regardless of your assets, which beggers believe really as it protects the financially vunerable but also unvunerable, sure its classless system but its not a fair system - you dont see them on the other hand giving the vunerable full council tax exemption, its not who can pay its you will all pay which is a total contridiction, Ive seen Tories and Labour in my life time not really change anything except mainly the names of benefits, this does not tackle the real issues of poverty & care

lisyloo

However as long as one partner is still living in the property no action can be taken to enforce a sale.

Just to clarify - a sale cannot be enforced, however this doesn't mean that you don't have to pay (eventually).
What happens is that the charges accrue and they get taken when the house is eventually sold.
As far as I know the local authorities are not allowed to charge any interest on this so it would deflate a little in real terms, but you DO have to pay it eventually, it just means they can't force you to pay it NOW.