Transfer of property from parents to son with intention to coninue living at property

overworked_underpaid

localhero wrote: »

1) If the whole property is gifted, the value of the property will be added back into the value of their estates when calculating IHT. This is irrespective of how long ago the gift was made - unless you pay the rent and they pay the income tax on it.

If they were to transfer the whole property as a gift, how would IHT be calculated. Would the value of the property be calculated at
1. £400,000 (value at date of transfer)
or
2. value of property at date of calculating IHT?

Would their will need to state that the property had been gifted on a certain date for this reason?

localhero

Their estates will be calculated upon death as though they still own the property.

As per previous posts, this course of action is inadvisable. If they wish to minimise IHT/care fees they should obtain professional advice and an up to date will.

sav4it

overworked_underpaid wrote: »

If they were to transfer the whole property as a gift, how would IHT be calculated. Would the value of the property be calculated at
1. £400,000 (value at date of transfer)
or
2. value of property at date of calculating IHT?

Would their will need to state that the property had been gifted on a certain date for this reason?

Why are you still comtemplating the idea when people have VERY CLEARLY explained that it's a no brainer?

margaretclare

sav4it wrote: »

Why are you still contemplating the idea when people have VERY CLEARLY explained that it's a no brainer?

Well said, sav4it.

I am still interested in this older couple who, it is said, have no income at all. That means that neither of them qualified for state retirement pension, SERPS etc. They need 'care' but apparently don't claim attendance allowance, regarding this as a 'government handout' which they'd rather not have. They want to sort out their finances while still alive, a laudable aim because it's too late when not alive. But at the same time, apparently they have no finances to sort out, the house being their sole asset.

I have never come across a couple like this! You learn something every day.

Margaret

jonsbird

It used to be possible to hand over ownership of your home.

Many years ago MIL did this to my husband who is an only child [OAP now :rotfl: ] with no problems. It was done as Deed of Gift I think it was called.

However when we decided to think of doing the same to our family we were strongly advised against it. The many pitfalls were pointed out to us.

Since then one of the downsides of making this Deed of Gift has come to fruition. We would have lost our home.

My advise is despite the best of reasons it really does have to be thought out thoroughly..or not at all.

JB

localhero

Unfortunately there are still many people around who don't take any advice who believe that it's still ok to hand over their homes.

Whilst understanding their motives, there are options available to achieve those aims without taking any risks.

margaretclare

jonsbird wrote: »

It used to be possible to hand over ownership of your home.

Many years ago MIL did this to my husband who is an only child [OAP now :rotfl: ] with no problems. It was done as Deed of Gift I think it was called.

However when we decided to think of doing the same to our family we were strongly advised against it. The many pitfalls were pointed out to us.

Since then one of the downsides of making this Deed of Gift has come to fruition. We would have lost our home.

My advise is despite the best of reasons it really does have to be thought out thoroughly..or not at all.

JB

Thanks for this. Very illuminating, JB.

I hadn't even realised it had ever been possible, but then, in the time you speak of, fewer of us owned our own homes (it was more usual to rent) and few in our wildest nightmares could have imagined the stupid prices they are now 'worth'!

The fact that it used to be possible is obviously the reason that the idea is still around - folklore, if you like. I've heard this idea described as 'pub talk'.

Your husband is our age-group now (we don't use the term OAPs!) and in earlier decades it wasn't customary to go into privately-owned care homes and have to pay for it. There were geriatric hospitals etc but there was never a question of having to pay for it. Also there were fewer divorces (where one's home forms part of a divorce settlement) and fewer personal bankruptcies.

Margaret

moonrakerz

margaretclare wrote: »

Thanks for this. Very illuminating, JB.

I hadn't even realised it had ever been possible, but then, in the time you speak of, fewer of us owned our own homes (it was more usual to rent) and few in our wildest nightmares could have imagined the stupid prices they are now 'worth'!

The fact that it used to be possible is obviously the reason that the idea is still around - folklore, if you like. I've heard this idea described as 'pub talk'.

Your husband is our age-group now (we don't use the term OAPs!) and in earlier decades it wasn't customary to go into privately-owned care homes and have to pay for it. There were geriatric hospitals etc but there was never a question of having to pay for it. Also there were fewer divorces (where one's home forms part of a divorce settlement) and fewer personal bankruptcies.

Margaret

This was probably in the era of Death Duties (precursor to Inheritance Tax), which was only paid by the VERY wealthy. As a result there was no financial loss to the Treasury if the "average" person did this - whether Lord Bath or the Duke of Westminster would have got away with this .................

With so many people now being caught in the Inheritance Tax trap the Government has to keep shutting all the loopholes to avoid a large loss of revenue.