Signing a house over to a child

Wolverwanderer

I recently bought a house for my son to live in and he's paying me back with a monthly equivalent of rent. It is in my name but I am now in my 60s and I want to sign the deeds over to him so the house will no longer be part of my estate. It won't have gone up in value much, if at all, since buying it. Any drawbacks to my plan? Can I simply fill in the Land Registry forms myself? Thanks!

marliepanda

If you need care or income related benefits anytime soon it will be classed as part of your estate.

Wolverwanderer

Thanks.....does anyone have any experience of how far back local authorities look?
But no tax implications for me or my son?

Browntoa

There is no limit if the council think it was done for deprivation of assets

Senior_Paper_Monitor

Complex subject - take professional advice (not from a bunch of people on a forum you don't know from Adam).

booksurr

Wolverwanderer wrote: »

I recently bought a house for my son to live in and he's paying me back with a monthly equivalent of rent.

do not use the word rent unless you are declaring it for income tax purposes and paying tax thereon since one assumes you have a repayment mortgage rather than an interest only mortgage and so some of what he pays is capital and would thus be subject to income tax on you

instead document (in writing, on paper, signed) that there is a private loan of £x repayable in installments of £y over z years. Your executors will need that info when you die because the outstanding debt will form part of your estate for inheritance tax purposes

Wolverwanderer wrote: »

It is in my name but I am now in my 60s and I want to sign the deeds over to him so the house will no longer be part of my estate. It won't have gone up in value much, if at all, since buying it.

nonetheless you will be liable to Capital gains tax so must get a valuation done based on open market value (not a discounted figure or the loan amount if less) as you are "connected persons" in tax speak so your gain is market value - original cost. Whether the gain is less than your CGT allowance (currently £11,100) will determine if you have any tax to pay

as you will have sold it and will be receiving payment against a documented loan agreement, it is the o/s amount of the loan which is still in your estate, not the value of the property itself. Note however if the loan is for less than full market value the difference (ie the discount you gave him) will form part of your estate for IHT as it will be a gift and so subject to the 7 year rule

Wolverwanderer wrote: »

Any drawbacks to my plan? Can I simply fill in the Land Registry forms myself? Thanks!

yes you can do your own conveyancing but as others said take proper advice on deprivation of capital implications and go see a tax adviser

G_M

Signing a house over to a child

A child cannot own property.

But no tax implications for me or my son?

It's a complex area and the following are all possibilities:

* You are receiving rent which should be declared as income via self assessment.

* If you transfer a property that is not your primary residence, Capital Gains Tax is payable on any increase in value unless within the annual allowance (£11,300). Gifts too.

Your gain is usually the difference between what you paid for your asset and what you sold it for.
There are some situations where you use the market value instead.
Situation: Gifts // Use market value at Date of gift

* Inheritance Tax might be payable if you transfer it as a gift and die within 7 years.

* It may be considered 'deprivation of assets' if you require future care and claim of the Local Authority.

* As a landlord, there are other regulations:

* Deposits: payment, protection and return

Can I simply fill in the Land Registry forms myself?

Assuming there is no mortgage, yes:

* ID1
* AP1
* TR1

https://www.gov.uk/government/publications/registered-titles-whole-transfer-tr1

xylophone

do not use the word rent unless you are declaring it for income tax purposes and paying tax thereon since one assumes you have a repayment mortgage rather than an interest only mortgage and so some of what he pays is capital and would thus be subject to income tax on you

The OP doesn't say that he took out any kind of mortgage to purchase the property.

He says only that he bought the house for his son.

He might have paid cash.

He mentions the "monthly equivalent of rent" but this arrangement seems more like a private mortgage where the OP is the mortgagee.

If all this is the case, the OP could see a solicitor to arrange the transfer of the house against an interest free loan and a first charge on the property.

He would need to check any CGT liability.

If he had to go into a home, he could not be considered to have deprived himself of assets - he still has an asset in the form of a charge on the property and the regular loan repayments which would continue to be paid to him even if in a home.

The solicitor would also advise on the situation with regard to the OP's will to cover the situation if he died before the loan was repaid.

Presumably the son could take out insurance to cover the loan repayment should he predecease his parent before the loan was repaid.

booksurr

xylophone wrote: »

The OP doesn't say that he took out any kind of mortgage to purchase the property.

if you wish to criticise other people's posts then why not include in your quote the fact i said assume

xylophone

if you wish to criticise other people's posts then why not include in your quote the fact i said assume

I wasn't criticising, merely stating a fact.

The quote in my post (see 8 above) includes "assume".

Rain_Shadow

G_M wrote: »

A child cannot own property.

I think strictly a 'minor' can't own property
.