Parents gifting their house to me

NW_London

I've searched here and on the web but I still haven't sussed this out.

My parents want to gift me their house as they are moving into another house. Their current house is mortgage free. Am I right in assuming I/they don't have to pay any taxes as long as they live for 7 years and they don't benefit from the old house in any way?

Any useful help appreciated.

kidmugsy

NW_London wrote: »

My parents want to gift me their house as they are moving into another house. Their current house is mortgage free. Am I right in assuming I/they don't have to pay any taxes as long as they live for 7 years and they don't benefit from the old house in any way?

If their current house has been their principal private residence throughout their ownership, they will have no Capital Gains Tax to pay. If they gift it to you, there is no gift tax to pay, simply because the UK doesn't have a gift tax. As you say, "as long as they live for 7 years and they don't benefit from the old house" their estate will have no Inheritance Tax to pay on the value of the gift. (Or rather, this applies to each of their estates separately.)

The last issue is "deprivation of assets": if one of them is already old and frail, the gift may be viewed as DoA if he or she tries to get the local council to pay for old age care. If they will fund their own care, or die without needing care, or are relatively young and fit, then this shouldn't be a problem.

Mind you, I have no experience of this area, so keep an eye open in case someone comes along who has the benefit of experience or professional expertise.

Cornucopia

That's my understanding, too.

However, if you are talking about an asset worth several £100K, then it would be well worth seeking professional advice (from an Accountant or specialist Solicitor).

Mojisola

NW_London wrote: »

My parents want to gift me their house as they are moving into another house. Their current house is mortgage free. Am I right in assuming I/they don't have to pay any taxes as long as they live for 7 years and they don't benefit from the old house in any way?

kidmugsy covered most things.

A married couple can leave an estate of £650,000 so, unless your parents have more than that, you don't even need to worry about the 7 year rule and inheritance tax.

The deprivation of capital issue may be more relevant, depending on their ages and state of health and how much other capital they have.

NW_London

Thanks for the replies guys. Parents are in their 60's and in good health (touch wood!). The property is worth £750k and they are buying (outright) a new house to live in so they'll still have assets. I don't think "deprivation of assets" will be an issue but I'll be seeking legal advice just to be safe.

Last question. Can I do the transfer of the property into my name myself or does a solicitor need to be involved?

Mojisola

https://www.landregistry.gov.uk/public/forms/completing-form-tr1

booksurr

NW_London wrote: »

I don't think "deprivation of assets" will be an issue but I'll be seeking legal advice just to be safe

there is no time limit on how far back a council may go in terms of looking for a claimant giving away their assets.

So in your case as parents have given you £750K (a not inconsiderable sum!) it is very possible that DOA will remain an issue ad infinitum, assuming of course that parents end up claiming means tested benefits - but given their apparent "worth" one could assume that is unlikely as they (you?) can afford better than a council home

NW_London wrote: »

Last question. Can I do the transfer of the property into my name myself or does a solicitor need to be involved?

very simple to DIY a transfer in such circs - there is an official Land Registry representative on these boards who will hopefully pick up this thread in their daily search and thus provide the links to the relevant forms you need to use, if not just phone the LR and ask them (assuming England and Wales!)
http://www.landregistry.gov.uk/contact-us/customer-support

Mojisola

booksurr wrote: »

there is no time limit on how far back a council may go in terms of looking for a claimant giving away their assets.
So in your case as parents have given you £750K (a not inconsiderable sum!) it is very possible that DOA will remain an issue ad infinitum assuming of course that parents end up claiming means tested benefits - but given their apparent "worth" one could assume that is unlikely

Unless they tie up the bulk of their assets in the new house - if one spouse needs care the family home can't be taken into account when the financial assessment is done but giving away £750k would be looked at.

If they have plenty of liquid assets, it won't be a problem.

NW London - if you haven't got one already, think about making a will. If you have got one, reassess it in the light of having the new house.

purdyoaten

NW_London wrote: »

Thanks for the replies guys. Parents are in their 60's and in good health (touch wood!). The property is worth £750k and they are buying (outright) a new house to live in so they'll still have assets. I don't think "deprivation of assets" will be an issue but I'll be seeking legal advice just to be safe.

Last question. Can I do the transfer of the property into my name myself or does a solicitor need to be involved?

I presume that you will be living in the house as your main residence. If not, however, it would be important to obtain a formal independent valuation as this will be your base cost for Capital Gains tax in the future - evidence to support any HMRC challenge.

getmore4less

Gifts that size also benefit from taper relief.

NW_London

I'll be caring for my parents when they need it so council care/benefits is out of the question. If they need special care, it will be funded for privately. My parents new house will be their only asset which they will live in as long as they're able to. Any bills/expenses will be covered by me/my younger sister who still lives with them.

I will be making a will, it's one of those things that I've been putting off but I'll get it sorted soon.