Gifting Property to Family

bamgbost

Not sure if this is in the right forum, if not pls advicewhere best to ask.

But here’s the situation:

My FIL has a Buy2Let property of his in the UK. He does notreside here, but visits every 6 months.
He has brought up the topic of gifting this property to mywife & I.

Now he has asked us to research what this would mean for bothparties – in terms of tax, clauses, fees, etc. And what needs to be done tomake it happen.

We have no clue, about mortgages or any of this. So I hoped someonecould advise as best they can. We will go to a solicitor, but a “ heads up” onwhat to expect, etc would be good.

We currently rent and most likely will not move into theproperty as its not in commutable distance. I.e. Leave it as Buy2Let

Is there any benefit disadvantage to him not being a UK resident, or UK national? Of us not living there vs living there?
Any ideas on how straightforward this will be, and what we should be aware of?

bamgbost

Also... do they do a Credit Check on us to do it?
Cos our Credits are not in Prime condition - currently working on it.

I also assume, it rules us out of being "first time" buyers then??

Pixie5740

If he is gifting the property to you, why would you need a mortgage?

As the property is not his main residence then Capital Gains Tax is a possibility. Inheritance Tax might be an issue as well.

Whether or not there is an advantage to him being a UK resident or UK national I don't know.

G_M

He'll be liable for Capital Gains Tax as it's not his main residence. No idea how HMRC collect this from non residents though. But this is an issue whenever he sells and whoever he sells to.

As it would not be your main residence, you too would be liable for CGT if/when you sell.

If there's currently a mortgage it will need paying off, either by him or by you (or by me if you undertake to pay me 234% interest).

If you take it on as a BTL you'll become landlords. Do you want that? Do you understand the implications? Read the link:

* New landlords: advice, information & links

As landlords, you'd need to declare the rent for income tax purposes (as hopefully so does he currently.......)

If it's a true gift (no payment of any kind) there would not be SDLT to pay I think.

No other tax implications I don't think.

Fees? If there's a mortgage, there will be redemption fees and solicitors fees. If no mortgage, just a straight transfer, you could pay a solicitor, or DIY. Not complicated.

theartfullodger

Regardless of him being resident or not he needs to have been declaring ALL his rental income (& allowable expenses) to HMRC, even (indeed arguably especially) if making a loss.

Has he??

If it is transfered as a gift you should get good, multiple valuations for
a) YOUR CGT purposes (so if & when you sell this B2L & it went up in value you can provide evidence to tax man )
b) So that should be sadly die within 7 years you & his estate will have something to work on for his estate's IHT (either UK or whatever else tax jurisdiction he is in).

DTDfanBoy

G_M wrote: »

No other tax implications I don't think.

That really depends on which country the father is resident in, he should check up on his local laws as well

bamgbost

Thanks for the quick responses guys.

That's a point I forgot to mention . yes the property still has a mortgage on it! So we will need to get one I assume?! We cant just take over an existing one??

With the whole CGT, does that not only happen @ point of sale?? And as its a gift, do the government still ask for it before its sold?

bamgbost

And yes he has been declaring the rent to HMRC, as its been managed properly through agents, etc in UK.

getmore4less

bamgbost wrote: »

With the whole CGT, does that not only happen @ point of sale?? And as its a gift, do the government still ask for it before its sold?

CGT is assesed on any disposal.

davetrousers

bamgbost wrote: »

He has brought up the topic of giving this property to my wife & me.

..........

Tixy

As you are connected parties then he will be deemed to have sold the property to you at the current market value - and that value will be used as the basis for assessing whether he has made a gain, and therefore what capital gains tax is due.

Is he actually gifting the property to you (after paying off the mortgage himself)? or does he mean he is prepared to sell to you at under value? in which case you'd need to pay him the amount he needs to pay off his existing mortgage. Which if you don't have that amount in savings means you will need to get a mortgage yourselves, which if you intend to rent out will need to be a buy to let mortgage.

Your ability to get a mortgage will depend on your credit history/credit files, as well as many other factors.