Gifting House Query

overworked_underpaid

My uncle wants to gift his house to his nephew but still has a 10K mortgage remaining on the property (worth approx £250K). His nephew is working and will not have a problem getting a 10K mortgage or loan. He wants to know how he would go about doing this.

He understands that his nephew will be liable for IHT if he was to die within 7years, but wants to know if there would be anything he or his nephew may have to pay when they do this transfer. He is not keen on selling the house to his nephew (I dont know why?). Once he transfers the house to his nephew he will not be living in that house. This is his only house and he has no other property.

lindabea

overworked_underpaid wrote:

He understands that his nephew will be liable for IHT if he was to die within 7years,

There should be no IHT as the property value is below the current threshold.

Toni_Tax

The uncle will have to pay Capital Gains Tax using the market value as the proceeds in the calculation, unless it is/was his principal private residence.

tyllwyd

Is he giving the house away rather than selling it because he is going into a nursing home and doesn't want to have any assets used to pay fees? I'm not sure of the rules, but I've got a feeling that could be a problem.

Toni_Tax

No CGT then but I hope that works. It infuriates me that you work all your life to own your own home and the gov'mt can take it away from you just like that. What the hell do we pay national insurance for eh? :mad:

Gorgeous_George

Toni_Tax wrote:

No CGT then but I hope that works. It infuriates me that you work all your life to own your own home and the gov'mt can take it away from you just like that. What the hell do we pay national insurance for eh? :mad:

The Government do not take your home away from you. You spend the equity in your home on your care in later life.

National Insurance would need to be very much higher if everybody was to be granted free residential care in their old age.

The argument should be that those who have no funds/assets should not be entitled to free care when others are forced to pay. Whatever happened to families?



GG

overworked_underpaid

Toni_Tax wrote:

The uncle will have to pay Capital Gains Tax using the market value as the proceeds in the calculation, unless it is/was his principal private residence.

This is my uncle's only property. Will he still be liable to pay CGT?

oldwiring

tyllwyd wrote:

Is he giving the house away rather than selling it because he is going into a nursing home and doesn't want to have any assets used to pay fees? I'm not sure of the rules, but I've got a feeling that could be a problem.

It is called "Deprication of Assets". Basically a Local Authority, if funding the care of a person and suspecting that assets have been disposed of to evade charges, investigate and recover charges so evaded. I think this can be from a third party beneficiary. I found this which may be useful and informative for anyone interested

http://www.housingcare.org/downloads/kbase/2338.pdf

Patr100

lindabea wrote:

There should be no IHT as the property value is below the current threshold.

Assuming that the rest of his estate ie any savings etc, doesn't tip him over the threshold.

Toni_Tax

overworked_underpaid wrote:

This is my uncle's only property. Will he still be liable to pay CGT?

In that case, no cus it's his PPR

margaretclare

Toni_Tax wrote:

It infuriates me that you work all your life to own your own home and the gov'mt can take it away from you just like that.

As Gorgeous George has already pointed out, they can't and they don't. This is one of those colourful folk-tales.

You are confusing social care from the local authority with what the gubbmint can do. True, the gubbmint partly-funds local authorities, the rest of LA funding comes from council tax. Local authorities are famously cash-strapped. Re 'taking your house away', the most they can do is to place a legal charge on it, to be repaid when the house is eventually sold, presumably after the owner's demise.

Put it another way - if you are going to live permanently in someone else's house i.e. a residential home or nursing home, why do you need your own home? You ain't ever going to be able to go back there and live independently, as you did - those days are gone. Why not use that substantial asset to fund greater choice and comfort in your final phase of life? What's the point of leaving it sitting there empty, deteriorating?

What the hell do we pay national insurance for eh?

We pay for benefits in our working lifetime - unemployment, sickness, maternity, child benefit, and state pensions. We actually pay for these at the time i.e. my past NICs paid for past pensioners, just as working people are paying for my state pensions now (thank you, people!) Although I fulfilled the conditions for a full state pension, it wasn't the case that I was paying into something like an investment fund. What I get now comes from money that's being paid in now.

Margaret