Can you give away your house?

Despin_2

Hey there.

My Grandfather is a pensioner with a fully paid off mortgage in a house he's lived in for 50 years. He plans on leaving me the house in his will. We were talking recently how the house it pretty run down and how he would like double glazing put in and stuff like that.. But he would need to get a loan to do it as he cant afford it out right. But he is also worried that he is getting old and he doesnt wanna take on any big(ish) debts right now. I think he already has a small (a few thousands) secured loan with his bank that he pays off monthly.

I guess my question is this. Would he be able to sign his house over to me now? So I would own the mortgage free house and he lives in it with his name on all the bills and stuff?

Then would I be able to take a small secured loan out on the house (say ten grand) and start doing it up for him (and I guess selfishly myself because it will one day be mine anyway)?

I'm assuming the house will be worth about 100 grand as that's what houses near by went for.. but then again that was a few years back. It may well be worth a lot less now.

Anyway.. I was just after a little advice before taking this to him

Who would be the best to turn to in this situation?

Citizens advice?

Caz3121

You need to get legal advice on this. If your grandfather needs care in years to come or any mean-tested benefits they may count the value of the property as what he should have in his bank to live off. Best see a lawyer

McKneff

Why not just take a loan out as things are now seeing as your going to inherit the house and make grandads life a bit easier in his twilight years.

clairbear_3

Check with local council ,gramps may be elligable for a grant to do refurbishments.

POSSETTE

there is also the 7 yrs catch.Its like a "living will "your suggesting,BUT anything over £3000 (i think) a yr, that is given to someone like this,is then liable to 40% tax if the giver dies within 7 yrs.
Someone will have more details on this im sure.

CLAPTON

yes he can give it to you but you need to be aware of the following

1. if later you sell it then you will be potentially be liable to CGT as its not your principal residence
2. if he needs care in the future then the council may consider he has deliberately deprived himself of assets. However, if he didn't give it to you they could force the sale so no real difference here.
3. there is a potential IHT issue but if his total estate is less than 325,000 then no problem

CLAPTON

POSSETTE wrote: »

there is also the 7 yrs catch.Its like a "living will "your suggesting,BUT anything over £3000 (i think) a yr, that is given to someone like this,is then liable to 40% tax if the giver dies within 7 yrs.
Someone will have more details on this im sure.

The rule is that if someone's estate is greater the 325,000 (double if a widow(er) in some circumstances ) then IHT is payable.

If some one makes gifts within seven years of their death then the value of the gifts are added back to the estate and IHT will be payable if its above 325,000 as before.
So makes no difference really.

POSSETTE

ok ..thought there was something in it.

localhero

CLAPTON wrote:

If some one makes gifts within seven years of their death then the value of the gifts are added back to the estate and IHT will be payable if its above 325,000 as before.

.....But if he still benefits from the property after making the gift then it will be included in his estate however long ago the gift was made.

OP, there are many pitfalls with this idea and I would proceed with utmost caution.

TEDDYRUKSPIN

localhero wrote: »

.....But if he still benefits from the property after making the gift then it will be included in his estate however long ago the gift was made.

OP, there are many pitfalls with this idea and I would proceed with utmost caution.

IHT taper relief will definitely not apply to you (invalid in this case). As above, even if he signed the house to you, your grandfather will be living in the house and therefore, IHT will apply unless it is under the IHT tax threshold when he eventually passes away.

No matter how he signs this over to you, he will considered to have benefited from this house. 7 years rule does not apply.

The 'will' is fine as long as he doesn't have a massive estate (assets) over the inheritance tax threshold. If he does, he will need to seek advice from a inheritance tax expert (i.e. not all solicitors can do this).

PS. You said he has a secured loan on the house. If he passed away today, in order for you to get the house, this must be paid off first!

Robert_Sterling

Your father should retain ownership of his house in case he needs looking after later in life otherwise how will he be able to pay for help?

He could perhaps go for equity release.

Perhaps you could help him by getting a loan to pay for his home improvements.