Can parents gift or sell house to their children and receive pension credit?

Mojisola

If the house is worth £130,000 and they obviously don't have a huge amount of capital or they wouldn't be getting Pension Credit, there shouldn't be any worries about inheritance tax.

RGJ57 - what's the reason behind the idea of the transfer? Maybe someone on here could suggest another way round the problem.

zagfles

Mojisola wrote: »

If the house is worth £130,000 and they obviously don't have a huge amount of capital or they wouldn't be getting Pension Credit, there shouldn't be any worries about inheritance tax.

Good point - the IHT threshold is something like £300k so they can't be liable if getting PC now.

nannytone_2

even if it were gifted, and the parents died within 7 years of the gift date......it would be classed as part of the estate and tax would be payable on it. i would assume that it works in a similar way if the parents need to go into a care home, although i'm sure someone who actually 'knows' rather than 'assumes' would be able to give correct information!

Mojisola

nannytone wrote: »

even if it were gifted, and the parents died within 7 years of the gift date......it would be classed as part of the estate and tax would be payable on it. i would assume that it works in a similar way if the parents need to go into a care home, although i'm sure someone who actually 'knows' rather than 'assumes' would be able to give correct information!

It does work the same way if they needed to go into care but there is no seven year limit. Unless the family could come up with a very good reason why the house was gifted to them, it would be assumed it was done to avoid care home fees and the parents would be assessed as if they still owned the house.

The house would not be taken into account if one of the parents needed care while the other continued to live in the house.

nannytone_2

so if i gifted my house today ( if i actually had one lol) to my son (i am 47) and it 40 years time i needed to go into a care home......that house would still be seen as mine?
what if i gifted it, and within the time i went into care, the house was sold?
the new property would never have been mine.
it's all hypothetical, but it's got me interested lol

Mojisola

nannytone wrote: »

so if i gifted my house today ( if i actually had one lol) to my son (i am 47) and it 40 years time i needed to go into a care home......that house would still be seen as mine?
what if i gifted it, and within the time i went into care, the house was sold?
the new property would never have been mine.
it's all hypothetical, but it's got me interested lol

I doubt something done forty years ago would matter but the problem is that there isn't a time limit in the rules, unlike the clear seven years for IHT.

zagfles

nannytone wrote: »

so if i gifted my house today ( if i actually had one lol) to my son (i am 47) and it 40 years time i needed to go into a care home......that house would still be seen as mine?
what if i gifted it, and within the time i went into care, the house was sold?
the new property would never have been mine.
it's all hypothetical, but it's got me interested lol

If you "gifted" it but carried on living in it, it would be a "gift with reservation" so would unlikely achieve anything, whatever the timescale.

Mojisola

nannytone wrote: »

what if i gifted it, and within the time i went into care, the house was sold?
the new property would never have been mine.
it's all hypothetical, but it's got me interested lol

If they did want to take it into account, it wouldn't matter if the property had been sold. You would be assessed as if you had capital equal to the value of the original property.

devildog

The home could be given away to whoever with it being stipulated that the people living there would hold a life interest(as in live there until their death)
There is also another way to do it but whoever was given the home could turn around and basically demand that the people living there(parents) would have to leave.
I can't remember the technicalities of it too much but basically I was advised not to do this for a few more years yet
As pointed out, if the house was above a certain value and parents were to die within 7 years there could be inheritance tax.
If they needed to go into a home for care, there could be an issue with regards to funding for the care. Technically social services or whoever could try and recoup this money through the courts but more often than not, don't, the longer the house was given/nominally sold the more likely people are to 'get away' with it

maureen_04

Many years ago a relative of mine who was threatened with bankruptcy sold their house to their married daughter for a fraction of the price it was worth to avoid being forced to sell to pay debts.
As there were different names involved there didn't appear to be any problem. Their daughter could only get a small mortgage as she didn't earn very much.
My relative still lives there, and they have since re paid the daughters "mortgage" off, of course this will help later on if they should need to go into a care home, they can't be expected to sell a property that they in theory are renting from a family member.
I do not believe you can be forced to sell your house for its market value, it is surely up to the individual what they ask. I does amaze me how people find a way round things though.