Parents selling house after making deed of gift

GMB101

Good afternoon,

My parents signed over their property to me around five years ago through a deed of gift. They have remained living in the property since that time. They have recently moved into another property and are currently selling the house in my name (I am completing all paperwork with estate agents /solicitors etc).

Although the property was transferred to me I still view it as being my parents and wish them to have the money from the proceeds of sale (around £70,000 - there is no mortgage on the property).

The solicitors have indicated the proceeds of sale will need to be paid to me rather than ,y parents. I am wondering whether I can "gift" this money to them without incurring tax etc. I've done some cursory enquirers online but remain unsure.

They have indicated, when first putting the house up for sale and before knowing that the proceeds would not be paid directly to them that they would be looking to give me some of the proceeds. Again, if I gift them the money would they be able to gift it back?

I know this sounds convoluted and it would be easier just to ask them how much I should keep but our relationship is not that easy. I would prefer them to have the money and then do as they wish with it!

Apologies for the long rambling post. Any help would be much appreciated.

silvercar

You can gift what you like. The only problem arises if the gifter needs to claim benefits or needs care. Then the gift may be taken into consideration.

If the property has increased in value you may have a CGT liability.

theartfullodger

Think either you or parents can gift whatever you like, but IHT may be payable in the event of death by givers within 7 years.

Anyone getting any benefits (excluding the - I assume parents are OaPs? - usual 6 benefits all old people get of state pension, winter fuel allowance, free 'bus pass, free prescriptions, free eye tests & £10 Xmas bonus...)?? I only ask as many benefits are impacted by savings/assets &, if given away, are likely still to be assumed under "deprivation of capital" regulations.

What was the purpose of this cunning plan? Whatever it was it seems to have been a waste of time & effort, or am I missing something?

GMB101

Thanks for the replies.

The property has decreased in value slightly if anything since the time it was transferred to me.

My parents - who are OAPs - already have savings which would bar them from certain benefits.

I think the original point of the transfer may have been in an attempt to avoid "care home fees"! Not that there was any indication that either parent would be needing to go into a care home/require any care at the time it was made - or even now.

The whole thing has been a pain - it has made a sometimes strained relationship even more difficult.

xylophone

The property is yours and if it has increased in value you may have a CGT liability.

If you gave the property back to your parents before sale and it has increased in value you may have a CGT liability.

Once you have the cash you can give it to your parents if you wish.

The gift will be a PET against your estate.

xylophone

I think the original point of the transfer may have been in an attempt to avoid "care home fees

This would have been regarded as deliberate deprivation of assets so quite pointless.

AnotherJoe

GMB101 wrote: »

Good afternoon,

My parents signed over their property to me around five years ago through a deed of gift. They have remained living in the property since that time. They have recently moved into another property and are currently selling the house in my name (I am completing all paperwork with estate agents /solicitors etc).

"they" arent selling it, you are.

GMB101 wrote: »

They have indicated, when first putting the house up for sale and before knowing that the proceeds would not be paid directly to them that they would be looking to give me some of the proceeds. Again, if I gift them the money would they be able to gift it back?

.

LOL. Of course it wont be paid to them its not their money since its not their house !
So essentially they still regard it as theirs despite clearly transferring it to you?
I wonder what else are they mismanaging regarding their financial affairs.

You can gift anyone , anything you want. They dont have any money (from this sale anyway) to gift you.

The only taxes due would potentially be ones due after death.

As a laugh why dont you tell them "thanks for the money look at this 360 day RTW luxury cruse I've bought myself with the money from my house" and see what they say.

Then hand them a cheque for £70k minus any CGT and other expenses you may have paid, and stay out of their cockamamie financial schemes in future. (though to be fair if they say "we'd like to give you (say £20k) then rip up that cheque and write them one for £50k to avoid any potential IHT issues down the line)

theartfullodger

Be careful: House was gifted to you 5 years ago. IHT applies for 7 years. You are selling now. You state you will give the money back to parents:

Should (hopefully not) parents die before the original 7 years is up YOU may still be liable to pay IHT even though you don;t have the money.

Why is it people who try to wriggle out of their obligations - (tax, care home fees, etc etc..) so often make a right muddle of things?

I am not for a moment criticising anyone's action here, merely asking a question.

Best regards to all

Keep_pedalling

theartfullodger wrote: »

Be careful: House was gifted to you 5 years ago. IHT applies for 7 years. You are selling now. You state you will give the money back to parents:

Should (hopefully not) parents die before the original 7 years is up YOU may still be liable to pay IHT even though you don;t have the money.

Why is it people who try to wriggle out of their obligations - (tax, care home fees, etc etc..) so often make a right muddle of things?

I am not for a moment criticising anyone's action here, merely asking a question.

Best regards to all

As the parents continued to live there it would be classed as a gift with reservation, so the 7 year count down did not start until they moved out.

They were foolish to hand over the property in the first place, and I applaud the OP for gifting the proceeds back. No gain so no CGT issue, but he / she should be awarethe £70k will remain part of his estate for the next 7 years, but that is only an issue if their estate is near IHT territory and they are unfortunate enough to meet with an early demise.

GMB101

Thanks again for the replies.

I have found myself having to tread carefully through a situation not of my making and a situation that I certainly did not want. I hope to get through it without causing further problems with my parents!

I believe (although don't know for sur) that the whole of their estate would not meet the inheritance tax threshold.

Tom99

You will need to report the sale for CGT purposes even if no tax is payable since the sale is over 4x the £11,300 annual allowance.