gift house to son. who buys one for me. Tax implications?

littlerock

Apologies if already posted earlier but I cannot see it and may have exited before actual posting!

Basically I am retired in good health and live in large house no mortgage. My son, only child, lives in smaller house with growing family. I should like to downsize. They very much like my house so idea is to gift it to them and they sell theirs and move into mine. They buy me smaller one nearby.

What are tax implications?

G_M

The 'gift' would be subject to Inheritance Tax rules (7 year survival etc).

The gift might also be seen as Deprivationof Assets if you need care in the future (and claim it from the local authority).

Not sure about SDLT- I think as son is 'paying' you for your house by giving you another smaller one in return, you would pay SDLT based on value of that smaller property.


Son would also pay SDLT on the smaller property when he buys it.

getmore4less

There was a thread covering this a short while ago.

gone looking for it.....

there is this one but have seen a new one.

https://forums.moneysavingexpert.com/discussion/5814578/house-swap&highlight=house+swap+sdlt

can't fine the newer thread

This is a potentially relevant page from the SDLT manual

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04020

trailingspouse

Look at all the 'what ifs' - even the ones you think couldn't possibly happen (because they can).


What if your son and his spouse split up - the house value would probably be divided 50:50 between them.
What if your son dies and his spouse doesn't want to stay in the house? Would you be happy for them to sell the house and use its full value to fund their next purchase?
What if you can't find a suitable property in the area you want at a price your son is prepared to pay?


And so on, ad infinitum.
As a general rule, family/finance/houses don't mix - and there's a reason for that.

xylophone

In effect this would be a gift with reservation of benefit.

You are only giving him your house on condition that he buys one for you.

Why can't your son sell his property, buy yours (with a mortgage in the normal way) permitting you to buy a property of your choice?

https://forums.moneysavingexpert.com/discussion/comment/75312845#Comment_75312845

Red-Squirrel_2

xylophone wrote: »

In effect this would be a gift with reservation of benefit.

You are only giving him your house on condition that he buys one for you.

Why can't your son sell his property, buy yours (with a mortgage in the normal way) permitting you to buy a property of your choice?

https://forums.moneysavingexpert.com/discussion/comment/75312845#Comment_75312845

This definitely seems far more sensible.

You can give him some of the equity as a gifted deposit.

getmore4less

There is a scenario where they don't need a mortgage you sell at full market value and just lend the money(interest free).

What is the best route all round will depend on real numbers in front of someone that know the ways to save the various taxes.