Gifting house to child

jcuurthht

I have just read it is possible for a parent to gift their house to their child in return for the following potential benefits:


1. Avoiding the property being used for means-testing if care is required
2. Avoiding inheritance tax if gifted over 7 years before death


The property in question is worth 300,000, and my Mum has another 280,000 in savings & investments.


What are the other implications of gifting a property for the giver & the recipient?

Thrugelmir

jcuurthht wrote: »

1. Avoiding the property being used for means-testing if care is required

Where is she going to live?

jcuurthht

She would continue to live in the same property.


So I guess the main risk for her is that she is living in a property which I own, meaning I could sell/kick her out.


Perhaps gifting property is more common when it's a 2nd/3rd property?

AdrianC

The first is unlikely to wash. Local authorities view substantial gifts as deprivation of assets. Will she need more than 280k of residential care anyway? That's a long period, even at private care home rates.

The second will work - although your mother's estate may be IHT-free anyway, if she inherited her husband's entire estate on his death.

Since she's planning on remaining in the property, you will become her landlord with all the legal responsibilities. If you hit financial trouble, the property may need to be sold, leaving her homeless. You will be liable for CGT on the difference in value between the date of the gift and the date of any later sale.

foxy-stoat

A child cannot own a property - so unfortunately its a non starter.

Good luck in trying to dodge as much tax and funding for your later years - am sure the state will pick up the tab if necessary.

Best take paid legal advice from your solicitor and accountant - or do you want to dodge paying for advice as well.

jcuurthht

AdrianC wrote: »

The first is unlikely to wash. Local authorities view substantial gifts as deprivation of assets. Will she need more than 280k of residential care anyway? That's a long period, even at private care home rates.



The second will work - although your mother's estate may be IHT-free anyway, if she inherited her husband's entire estate on his death.

My mother inherited my fathers estate, and there was no inheritance tax to pay.


When I inherit my Mother's estate, I will pay inheritance tax.

AdrianC wrote: »

Will she be continuing to live in the property after giving it away?

She will continue to live in the property.

davidmcn

The IHT point won't work, unless perhaps if she pays a market rent.

Out of interest, where did you read it? People here never seem to tell us where they get all their wacky ideas.

foxy-stoat

https://forums.moneysavingexpert.com/discussion/5876608/help-me-help-my-mum

Did you take the advice in your last thread?

jcuurthht

foxy-stoat wrote: »

A child cannot own a property - so unfortunately its a non starter.

The property isn't being gifted to a child. Someone can be an adult and continue to be a child of their parents. Actually, I'd say this is true for everyone.

jcuurthht

foxy-stoat wrote: »

https://forums.moneysavingexpert.com/discussion/5876608/help-me-help-my-mum

Did you take the advice in your last thread?

Yes, she has seen 2 so far. Another tomorrow. Neither have mentioned anything about gifts however.

jcuurthht

davidmcn wrote: »

The IHT point won't work, unless perhaps if she pays a market rent.

Out of interest, where did you read it? People here never seem to tell us where they get all their wacky ideas.

You can thank those wacky lot at the Money Advice Service :rotfl:



https://www.moneyadviceservice.org.uk/en/articles/gifts-and-exemptions-from-inheritance-tax#how-much-can-i-give-to-my-children-and-family-tax-free