Can my parents give me the house I have rented from them for the last 31 years?

Purpleprince

In 1983 my parents kindly bought a house specifically for me to live in, and I have done so ever since.

They paid £28,000 for it, and I have paid a low monthly rent to them ever since. Although low, the rent paid over the last 31 years probably amounts to three times what they paid for it.

Bearing this in mind, they would now like to give me the house rather than leave it to me as part of their estate, as they consider that I have 'already paid for it'.

Is this possible, and if so, what are the consequences regarding inheritance tax etc.

I have to add, that I am a complete newbie on this Forum, and may not know exactly what I, or you are talking about, so please be patient with me!!!

TheCyclingProgrammer

The main issues you face are inheritance tax if your parents died within 7 years and also CGT on your parents gain from the sale, which will be calculated on the property's actual value, not the sale price.

There will be no stamp duty though if they gift it to you.

Ames

How old are your parents and what's their health like? If they give it to you and need to claim means tested benefits or go into a home within a few years it could be considered deprivation of assets and they'd be treated as though they still own it.

xylophone

Your parents own a house, presumably outright (no mortgage).

They can make you a gift of the house.

They should check the CGT aspect as this is not their PPR.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm

"However, if you give away a second home, Capital Gains Tax may be payable if the property has increased in value between when you first owned it and when you gave it away."

There may be IHT implications as well.

See http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

G_M

GGT will be payable if they give it to you, since it is bound to have increased in value since 1983.

However, CGT is not payable on death if you inherit.

IT will be payable if you inherit on death, OR if they die within 7 years of giving it to you.

Assessment of their assets in the event of them applying for Care Home costs in the future is likely to include the value of the property, whether they still own it or have given it to you ('deprivation of assets').

jumperabv3

This is the first time I've ever heard of something like that ... and I'm quite surprised no one has raised an eyebrow and simply all of you discuss the techie details of tax involved!

Now which parents, in the world, ask their son to pay rent?!?!?!?!

Do you want to tell me that your parents acted as your landlords and you were their tenant?! What kind of parents do that?! (I'm married, no children yet, but I would never dream of charging my children rent!!!!!!)

:eek::eek::eek::eek:

MobileSaver

jumperabv3 wrote: »

Now which parents, in the world, ask their son to pay rent?!?!?!?!

Sensible, responsible parents who don't want their children growing up wrongly thinking everything in life is free?

MobileSaver

jumperabv3 wrote: »

Now which parents, in the world, ask their son to pay rent?!?!?!?!

Sensible, responsible parents who don't want their children growing up wrongly thinking everything in life is free?

jumperabv3

MobileSaver wrote: »

Sensible, responsible parents who don't want their children growing up wrongly thinking everything in life is free?

Fair enough, then educate your child to participate in the house's expenses if he works, or something like that ... but drawing up a contract stating I'm your landlord, you have to pay me rent - that's absurd! It's your son, not a stranger!!!!!

Pixie5740

It's not absurd at all. If my parents had bought a property for me to live in I wouldn't dream of expecting to live in it for free. Besides the OP has been paying a "low monthly rent" so his parents having been charging market rates.

jumperabv3

There is a difference between:

1) Living in a property for free (okay for some, bad for others)
2) Paying your own share to your parents for living there (best option for me if I wanted my child to pay his own share into the household expenses)
3) Drafting a legal contract with your son (!!!!)

I guess it's about education, mentality, culture and other factors which make people in the UK do that ... in my culture this line of thought or consideration about doing something like that - doesn't exist.

You guys want to tell me if your son gets sick or can't pay the rent you're going to take him to court for breaking your contract?! That's just sick!