transfer of property parent to child

dollface83

Hi All,

I am an adult and my parents wish to transfer a house they own that is mortgage free to my name. The house is currently rented out and I don't plan on living there. My parents live in another house they own in the same town (UK). Can people advise me of the process to transfer with minimal charges/avoid IHT etc?

Thank you for reading.

HappyHarry

dollface83 wrote: »

Hi All,

I am an adult and my parents wish to transfer a house they own that is mortgage free to my name. The house is currently rented out and I don't plan on living there. My parents live in another house they own in the same town (UK). Can people advise me of the process to transfer with minimal charges/avoid IHT etc?

Thank you for reading.

You will need a solicitor to deal with the change to the land registry.

If your parents have seen an increase in the property value whilst they have owned it, then this is a capital gain, and your parents will be liable for capital gains tax. This gain will be based on the initial property value when they acquired it, and re-sale value of the property at the time they gift it to you.

The property will form part of your parents' estates for seven years after they make the gift. If they both survive seven years, then the property value will be exempt from IHT, if they die within seven years, then the property will form part of their estate for IHT.

If your parents are required to pay care fees in the future, and they are unable to do so, then the local authority may consider the gifting of the property to be deliberate deprivation of assets, and come after you for payment.

There are quite a few twists and turns to all the above, but it should give you and your parents some basic areas to look into.

What is their objective for gifting you this property?

dollface83

Thank you for the quick reply Happy Harry.
I will get in touch with a solicitor. The parents will not go in a home whilst I am alive and kicking

Purpose is they were going to do it eventually but would rather not wait till they cease living for it to line governments coffers

xylophone

Your parents are making you a gift - for IHT purposes this will be a PET.

http://www.macintyrehudson.co.uk/article/potentially-exempt-transfers

Your parents will need to consider their CGT position as it is not their Principal Private Residence.

It will not be your PPR either so you will need to consider CGT on sale.

http://www.uktaxcalculators.co.uk/capital-gains-tax-calculator.php

kidmugsy

How much is the house worth?

uknick

eggha wrote: »

...Sounds like your parents need to do some number crunching with an inheritance tax planner rather than making DIY guesses and getting it wrong

Wise words

jennifernil

eggha wrote: »

then they should not do it as they are quite voluntarily going to "line the government's coffer" due to the Capital gains tax they will have to pay at point of gift (I'll assume it has gained in value) and also land you with having to pay the higher rate SDLT if you ever buy another property yourself (I assume you only own one property yourself at the moment)

If OP already owns one property that they live in then they could sell this and buy a new main residence without incurring any higher rate SDLT.

A problem would only arise if they do not already own a main residence. If they owned the rental property, buying a main residence in addition would then incur the extra tax, to avoid it they would have to sell the rental property BEFORE buying a main residence.

madgagoo

Plus no-one has even mentioned using a trust to holdover the gain, meaning that no CGT could be due for years! A few hundred pounds spent on some professional advice could save the family thousands....

Mojisola

dollface83 wrote: »

The parents will not go in a home whilst I am alive and kicking

It's a lovely thought but the reality of looking after a seriously ill person at home can change things. You have to be prepared to do what is best for the person.

Purpose is they were going to do it eventually but would rather not wait till they cease living for it to line governments coffers

If your parents need care, none of the money they would have to pay would go to the government.

If they are self-funding, they will get a bill from the home just the same as if they went to stay in a hotel - the only government involvement would be to pay them benefits like Attendance Allowance.

Keep_pedalling

Your parents should deffinately take professional advice if their estate is likely to attract IHT, but first thing to establish is whether their estate is large enough for them to worry about that. From today their joint nil rate band, including primary residence, is £850,000 which will rise to £1M by 2021.

dollface83

Sorry for the delay guys. I was off the grid I will read through and reply in due course thank you all for taking the time to read and comment