House changing name of ownership?

myright

my mum is putting the house on my and my sisters name as she is getting married soon.

What is the best way to avoid tax etc?

is it a straightforward procedure? whats the rough legal/ lawyer costs for this kind of stuff?

kingstreet

I can't think of a tax you can avoid, unless something happens to your Mum in the next seven years, then the transfer could become liable to Inheritance Tax?

I assume she will no longer be living in the property?

Is there a mortgage on the house? If there is, the process is considerably more complicated as the lender will be involved.

If there's no mortgage, you can apply directly to the Land Registry to amend the title.

http://www.landregistry.gov.uk/www/wps/portal/!ut/p/c1/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gfN1MTQwt381BD_2A3A08LT2cL49AwIwMDY6B8JB55Q2J0G-AAjgYEdIeDXIvfdpA8HvP9PPJzU_ULckMjDLJMFAF9iqN5/dl2/d1/L2dJQSEvUUt3QS9ZQnB3LzZfTEY1NDE4RzdVMU9TRjBJOElDODNVVjIwMDM!

Mojisola

There are other things you need to consider for the future. Being a part-owner of a property could have an effect on your entitlement to means-tested benefits. If you or your sister get divorced, part of your mother's house will be included in any financial settlement made.

CLAPTON

do you mean she is giving you the house?

does she live there?
will she continue to live there?
do you or your sister live there?
will either of you live there after it becomes yours?
do either of you claim any state benefits?

how much is it worth ?
how much is your mother's total estate worth

myright

yes the house is worth about £100k
There is NO mortgage to pay, it's all paid.
My mother lives here and will continue to do so.
After it becomes on our name, we will continue to live here.
What are means test benefits?

kingstreet

Can I ask why your mother is giving the property to you? There must be some plan behind the gesture, surely?

Mojisola

Unless your mother has a lot of savings, her estate won't have an IHT liability. You and your sister may have to pay Capital Gains Tax when the house is eventually sold.

If your mother needed LA funded care in the future, they may consider her transfer of the property to be deliberate deprivation of capital and refuse to fund her.

kingstreet

Mojisola wrote: »

Unless your mother has a lot of savings, her estate won't have an IHT liability. You and your sister may have to pay Capital Gains Tax when the house is eventually sold.

If your mother needed LA funded care in the future, they may consider her transfer of the property to be deliberate deprivation of capital and refuse to fund her.

Gifting the property to the daughters, then continuing to live in it is no IHT solution anyway. Unless she pays them a market rent it would fall foul of the gifts with reservation rules.

If it's the two daughters' main residence, I don't see a CGT problem.

Agree on the deprivation of assets angle, but if the mother's about to get married she's probably not going to be looking for care too soon?

Mojisola

kingstreet wrote: »

Gifting the property to the daughters, then continuing to live in it is no IHT solution anyway. Unless she pays them a market rent it would fall foul of the gifts with reservation rules.

I know but the house is only worth 100k so, unless there is a lot of capital, IHT won't be an issue for them.

If it's the two daughters' main residence, I don't see a CGT problem.

I understood it would be the mother and her new husband living in the house.

Agree on the deprivation of assets angle, but if the mother's about to get married she's probably not going to be looking for care too soon?

No, but if myright is considering going ahead with this, it's best to know all the possible pitfalls (although I had a 98 year old relative who was planning to marry - unfortunately he died a week before the ceremony).

myright

Thanks guys

So what are the pitfalls?

tbh I'll make it more clear.

My mum is good in health generally (she's 49). So she doesnt need care.

What is the 1HT and CGT problem???

We will all live in the house as normal, pay no rent to each other etc. Would that qualify as a 'gift?' or does she need to pay us rent or whichever way it is? if so how much?

Secondly, my personal plan is to move out in 4-5 years when I'm married and made enough savings for a deposit. Would this have a negative affect on me? (this plan is a mighty 'if')

Also we wont be selling the house any time soon. it's the family house.

CLAPTON

myright wrote: »

Thanks guys

So what are the pitfalls?

tbh I'll make it more clear.

My mum is good in health generally (she's 49). So she doesnt need care.

What is the 1HT and CGT problem???

We will all live in the house as normal, pay no rent to each other etc. Would that qualify as a 'gift?' or does she need to pay us rent or whichever way it is? if so how much?

Secondly, my personal plan is to move out in 4-5 years when I'm married and made enough savings for a deposit. Would this have a negative affect on me? (this plan is a mighty 'if')

Also we wont be selling the house any time soon. it's the family house.

it seems an absurb idea for a mother so young with no obvious benefits to anyone

issues

- when you move out then it will cease to be your principal residence and if it was later sold then you would potentially have to pay capital gains tax on the profit (although your cgt allowance would mitigate against the profit)

- if you married and sadly died or divorced then your share of the property would become your OHs which may not please your mother

-if you become bankrupt then your share the house would be a asset and would sold for the benefit of your creditors

-IHT doesn't seems to be an issue at current values

- if any one of you needed to claim state benefits then the value of a property that you weren't living in would be considered in relation to the benefits


what benefits do the family think will accrue from this course of action; maybe there are other simpler ways of gaining these