Advice on Selling the house and giving money to children tax free

daddy65

Hi
We were planning to sell our house and give the money equally between our two children.
It may mean about £200,000 each.Is there a way we can give this money to our children without them incurring any tax on it?

Keep_pedalling

There is no gift tax in the UK, although your estate may pay IHT on it if you die within 7 years of the gift.

Would I be right in assuming that you have substantial other assets to live on once you have done this?

Savvy_Sue

Your children won't incur any tax on any gifts you give them.

You, on the other hand, should seek professional advice.

Some things to think about:

What is your total estate going to be worth, for the first to die and for the second? You can leave everything to each other free of IHT, but any gifts given within the seven years prior to death are added back into the value of the estate and may lead to a tax liability at that point.

Where are you going to live? Have you left yourself enough to live on in the manner to which you'd like to become accustomed for the remainder of your lives, bearing in mind that if you need care at home or in a residential setting then being able to pay for it gives you far far more choice, and not being able to pay for it means the local authority COULD regard your generosity to your children as DDA (Deliberate Deprivation of Assets). This will definitely be the case if either of you are currently in poor health.

There are other questions I could ask, but that will do for starters.

Keep_pedalling

Having just seen your thread about having hardly any pension provision, how can you afford to do this?

daddy65

Hi
Thanks for the answers.
We are thinking of moving abroad where we have adequate assets to live on comfortably for rest of the life.
Our home in UK is worth 800K of which after mortgage balance and fees,we should be left with 450K as balance,which we intend to pass on to children who are in Uni at the moment.

Savvy_Sue

Please get some proper advice (ie paid for). Please also think through all the 'what if' situations. Proper pessimist me, but what if ...

you become unwell / disabled / one of you dies - will you both be happy to remain overseas, is the healthcare good enough, is the political situation stable enough that eg galloping inflation would never be an issue ...

your children have children of their own - will you both be happy not being able to see them lots and lots and lots ...

your children blow the money you give them and come looking for more ...

your children have to claim means-tested benefits soon after receiving your generous gift and aren't entitled because they've spent all the money faster than the government estimates they should have done ...

I know we all have different ways of looking at things, but personally, I'd like to retain choices, even if that means paying tax on interest on savings / risking IHT / seeing my children remain in rented accommodation because house prices are beyond them (actually none of them WANT to buy yet, but even if they did ...)

I have known people who've sold the house / downsized and been very generous to their children. And some of them have ended up in very straitened circumstances, simply because they didn't leave themselves enough money for what life then threw at them.

You like to think that your children will never see you go without, but equally you don't like to go 'cap in hand' to them. And even if you did, they may not be well placed to help you, even if you have been incredibly generous to them in the past.

DigForVictory

My knee jerk responses were:
No chance of care home fees then? (You have Death on call?) &
a gift without incurring tax - well that requires 7 years survival, & anyway what about CGT for you?


Offhand it looks like generous dynamite as if you do need care in your declining years, there are no clear rules on just how far back the local authorities can go & require money. Or what elderly care in other countries might be like - good, expensive, both?


You plan to leave these islands & settle elsewhere - your call, but again there are a fleet of what ifs.


Sorry, but I'm right alongside Savvy_Sue - this generous idea needs careful estate planning & some of the branches of the decision tree involve very gloomy thinking (at which solicitors excel).

POPPYOSCAR

We are going to do something similar as we want to see our children benefit while we are still alive.


Go for it, life is short and can be ended unexpectedly anytime.


Get some advice from an expert financial advisor on the best way forward.

grey_gym_sock

daddy65 wrote: »

We are thinking of moving abroad where we have adequate assets to live on comfortably for rest of the life.

but do you mean adequate assets providing you are happy to spend the rest of your lives in a country with a much lower cost of living than the UK? it may be your plan to do that, but plans can change. you can become ill. 1 of you will die first. do you speak the language? will you miss seeing family and friends? what is the political situation in your destination country? will it be severely affected by climate change? and that's just the questions i can think of off the top of my head ...

there is nothing wrong with giving away money you don't need. but think very carefully about how much you do, or might, need.

and what is the motivation for giving your children £200,000 each now? instead of, for instance, keeping the money for the moment, but telling them you will help them with deposits to buy a house when they want to buy?

Keep_pedalling

I have nothing against being generous to your children, but I share the same concerns as the other posters here. We have provided both our children with substantial gifts, to pay off student loans, and later a deposit for a house, but I would not have done that while they were at uni, and neither would we give away assets that we may need later in life.