Best way to 'Give house to kids?'

lisyloo

I think in Scotland we get free care

Another solution is to move to Scotland.

margaretclare

bobmccluckie wrote:

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

I did read the question - the OP mentions avoiding paying tax.

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?

I completely agree with this. I nearly asked the OP 'if you don't want you assets (i.e. your house) used to pay for your care, who do you think should pay for it?

Aunty Margaret

lisyloo

I agree with the moral argument expressed here as well.
If the government pays for THEIR care then effectively that means tax payers pay for it.
That includes the OP (original poster) paying more tax during their lifetime for everybody elses care.

However regardless of the moral issues, we should still try and help the OP.
There ARE ways to pass on wealth to your children, for example you can give gifts which can be exempt from inheritance tax.
What you have to be careful of is that you don't leave yourself with nothing or not enough.

I would also point out that relying on the state for long term care is not necessarily a great idea.
Yes it would be free, but you would have no choice of home, it may not be a good one, it may not be near your family and friends and sometimes spouses can be split up.
I don't think that's a great state of affairs. Surely you want to leave yourself with choices.
What about if you want private medical care? Some people pay privately for hip replacements etc. rather than wait 2 years on the NHS.
Are you sure that giving it away is a good idea?
I want my parents to spend their having as many fantastic holidays as possible (or whatever brings them enjoyment).
Are you sure your children want you to do without?
Many children don't want this for their parents.

An alternative that might be worth considering is long term care insurance.
It will be expensive but it could guarantee that your children get something.

margaretclare

Yes, lisyloo, the whole idea of giving/selling/transferring your home to the kids does seem to leave you with few choices. There are people out there who live in a house that's now too big for their needs but they persist in hanging on to it 'for the sake of the kids'. What would seem to be a better idea is to move to somewhere smaller, free up capital, go on those dream holidays as you say!

We are determined that whatever is ours will remain ours until the very moment when the second of us pops his/her clogs. Until then we'd like to keep our options open as far as is possible. Once you relinquish control of the assets that you've worked so hard for, you lose all your options.

Lisyloo, you don't want your parents to do without, want them to spend their money on whatever brings them enjoyment. I applaud that. When we did an equity release 2 years ago we were urged to inform all our close family, and none of them was the slightest bit interested in the thought that this might diminish a possible inheritance. 'It's yours, do what you want.' Having said all that, there are children out there who take completely the opposite view, have pound signs spinning around in their eyes, and DO regard the parents' home as rightfully theirs! If that was the case I'd make darned sure it was left to my favourite charity.

Aunty Margaret

Bossyboots

bobmccluckie wrote:

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

I might be missing something here but doesn't the opening post ask for advice on transferring a property to "avoid any tax penalties". Inheritance tax is surely the biggest tax penalty relating to properties

margaretclare

Bossyboots wrote:

I might be missing something here but doesn't the opening post ask for advice on transferring a property to "avoid any tax penalties". Inheritance tax is surely the biggest tax penalty relating to properties

No, you're not missing anything, Bossyboots, and yes the opening post DOES mention the idea of avoiding tax by 'giving/selling house to kids', and the best method of doing this, presumably with the object of avoiding maximum tax to pay.

Aunty Margaret

HGLTsuperstar

Just to return to an earlier point about putting the house in trust, and the parents "renting" it from their kids, how do you go about this and what are the costs involved?

margaretclare

HGLTsuperstar wrote:

Just to return to an earlier point about putting the house in trust, and the parents "renting" it from their kids, how do you go about this and what are the costs involved?

I think this has been discussed in numerous other threads on Martin's site.

I know that it was emphasised that the rent had to be an economic rent bearing in mind size of property, rents currently being charged in the area....there has been an assumption among some people that the rent need only be of the 'peppercorn' or nominal variety and this is emphatically not the case.

It does seem unfair that the parents might be expected to pay rent on something they've bought already, presumably via a mortgage over many years. They might also be in reduced circumstances, on retirement pension, and not in a position to pay an economic rent.

There is also the point that *someone* would be liable for CGT if/when the house is eventually sold. If this is your sole main residence (sorry, there's a correct term for it) then CGT is not charged, but if you 'inherit' it, and it wasn't your sole or main residence, then taxes are liable.

We need one of the experts to come in here!

Aunty Margaret

Mumstheword

What if you were to sell your main residence and live in the inherited one, then sell that later at which point it would be your main sole residence?

Bossyboots

Mumstheword wrote:

What if you were to sell your main residence and live in the inherited one, then sell that later at which point it would be your main sole residence?

As far as I could work out then you would eliminate the capital gains