Mum wants to give us her house

vinuela13

Hi
My mum has informed myself and my sister that she wants to put her house in our names.Can anybody enlighten me as to the best way to do this.She would want to continue living in the house
Thanks

LandyAndy

It's a sale like any other, even though it is at a low or nil value, so you should contact a solicitor for the conveyancing. Your mother should then, formally, become a tenant and pay you rent (it can be purely nominal). My father made the same arrangement with my grandmother some years ago and it avoided having to sell the house to pay for residential care when she became too frail to live at home. As stamp duty is payable on the actual sale price, and I assume your mother is giving you the house, there will be no stamp duty to pay.

real1314

Hmmm, it's not just a simple sale.

For inheritance tax purposes it will be considered a "gift with reservations" and may still be treated as part of the estate.

For care home assesment it may be considered that it has been disposed of purposely to avoind having to pay fees. Which may mean they'd treat it as still your mums as far as assessing any contribution goes.

Why does your mum actually want to do this? It raises lots of issues / potential problems.

dolce_vita

There will be inheritance tax to pay if your mother dies within 7 years of gifting the property to you.

She will also need to prove to the tax office that she is paying the full market rent to stay in the property and be exempt from other taxes

kingkano

As stamp duty is payable on the actual sale price, and I assume your mother is giving you the house, there will be no stamp duty to pay.

Good advice except for the bit I've quoted. As far as I am aware stamp duty is payable on the transfer of interest (just like when a couple decide to register the other person's name on the deeds, basically selling half to the other person). Take professional advice on this.

LandyAndy

kingkano wrote: »

Good advice except for the bit I've quoted. As far as I am aware stamp duty is payable on the transfer of interest (just like when a couple decide to register the other person's name on the deeds, basically selling half to the other person). Take professional advice on this.

I was basing my comment on the fact that when I bought a house by part exchanging my old house I paid stamp duty on the difference in price (that is the money paid) not the purchase price of the new house. Just shows the need to consult a solicitor.

Other comments about inheritance tax and seven years are correct.

My grandmother went into care approx. 18 months after the transaction and there was no call on my father to sell the house to support her - again it was careful wording by the solicitor.

LandyAndy

kingkano wrote: »

Good advice except for the bit I've quoted. As far as I am aware stamp duty is payable on the transfer of interest (just like when a couple decide to register the other person's name on the deeds, basically selling half to the other person). Take professional advice on this.

I did this with Mrs LA about five years ago and there was no mention of the property's value and certainly no stamp duty to pay. It would require a hypothetical valuation of the property.

Even if our transfer was below the SD threshhold remember that she can sell half to you and half to your sister (presumably as tenants in common) and that these are separate sales for SD purposes. I think:rolleyes:

lovesit

Take a look at this:

http://news.bbc.co.uk/2/hi/business/4393275.stm

These rules are rather complex so please take professional advice!

meme_3

Sorry to hijack this post, but it has raised a question for me.

I have, just recently, invested in my parents home.

I did so when they bought it, so am registered as owning a given percentage.

This was done so that they could have a nice property rather than one which was, in my opinion, rather substandard, and which would have cost them just as much after doing all the necessary improvements (kitchen, bathroom, roof maintenance, garden clearing ... etc - the list is endless).

Does all this mean that they should be paying me some rent?
I don't want that!

Am I going to get stung in the future, tax wise?

vinuela13

Many thanks for all the replies.
We actually have an appointment with Mums solicitor tomorrow so I will let you know what kind of advice we are given.
My mum wants to give us her house so if ever ( which I hope will be never) she has to pay for care home fees she will not have to use her and my late fathers hard earned cash.
Her sister in law and husband have already let their daughter have their house and I believe from what my mother says they live their rent free.
BTW their daughter also works for a solicitor so I'm sure there must be ways that this arrangement can be made legal and binding.
I will let you know how we go on

Nicki

According to the money page in todays Sunday Times there will also be CGT to be paid. The conclusion which they came to on the facts of the case they were advising on then was that the donor could not actually afford to make the gift.

Hope your solicitor is able to give you better news