Splitting & Gifting A Property

gwynlas

So far all responses refer to the legalities of splitting the property,
You also need to consider the possibilities of your son marrying, divorcing and or his future partner being prepared to live adjacent to in laws. What if their parents need residential support?
There is also a possible scenario of the survivor of your marriage needing to fund long term care or remarrying on the death of spouse
Whilst you can prepare yourself by asking these questions on a forum if you have sufficient assets to have such worries then you need to engage professional services for inheritance planning.

Yalpsmol

Does your son own his property currently? So far it sounds like a poor deal for him....being gifted a property with sitting tennants, that he cant live in, (potentially) losing FTB status. If he wants to buy a home he might have 10 years as a landlord , owning 2 homes. That's difficult financially with paying tennants let alone not paying. Who will be paying to maintain the cottage that you and your parents are living in?

00ec25

Yalpsmol wrote: »

Does your son own his property currently? So far it sounds like a poor deal for him....being gifted a property with sitting tennants, that he cant live in, (potentially) losing FTB status. If he wants to buy a home he might have 10 years as a landlord , owning 2 homes. That's difficult financially with paying tennants let alone not paying. Who will be paying to maintain the cottage that you and your parents are living in?

read post #7


"My son already has his own flat,"


although that does not of course mean he owns it?

Yalpsmol

I read that post but it wasn't explicit whether OP meant they owned a property or just had their own place (ie didnt live at home- but renting).

trickydicky802

getmore4less wrote: »

Parents live there and you may move back in.

Check pre owned assets.

That covers this attempt to offload something trying to avoid gift with reservation.


Gifts are disposal for CGT purposes, not your main residence since others are living there.

I would argue that my parents are living with me in my house+cottage, which are internally connected and I have free reign over the entire property. I see that as no different to any other family members living in the same property.


This surely cannot be an entirely unusual situation. Many properties have 'granny annexes' in which elderly parents live with their children. To claim that this means the rooms they use cannot be part of my 'main residence' - thus giving rise to a CGT liability - seems a bit extreme. Why is it any different to providing a room for children in the family home? Are those rooms not part of the house owners 'main residence'?

As for gifts being a disposal for CGT purposes, how can that work in practice? What if the giver has is cash poor and cannot afford to pay CGT on a gift? Surely a tax is paid on something that's of material gain. So yes, sell an asset for more than you paid for it, you make a profit, you pay tax on that profit (in this case CGT), but where is the gain if the asset is gifted away?

davidmcn

You've been given accurate advice about the CGT rules, I'm not sure why you're arguing about them.

trickydicky802 wrote: »

What if the giver has is cash poor and cannot afford to pay CGT on a gift?

They can figure out their tax liability in advance of the transaction, and maybe not give it away for nothing if they're short of cash?

trickydicky802

Mojisola wrote: »

And your son will be building up a CGT bill while his grandparents continue to live in the cottage (and that will continue if you move into it after they are gone).

In theory, yes. But in practice, since his intention is to eventually move into the cottage+house when he eventually inherits them then CGT will only be an issue if he does decide to sell.


Yes, I know that plans can change but there's not much I can do about that. All I want to do is pass on our assets with as little IHT as possible.

Mojisola

trickydicky802 wrote: »

We own a large detatched house that is already divided into two self contained dwellings, each with its own front door, bathroom(s), kitchen, etc. Lets call them 'house' and 'cottage'.

House and cottage have had separate council tax bands for around 20+ years (since before our ownership)

trickydicky802 wrote: »

I would argue that my parents are living with me in my house+cottage, which are internally connected and I have free reign over the entire property. I see that as no different to any other family members living in the same property.

You can't have it both ways - either they are one property or they are two separate properties.

The two council tax bills means it would be very hard to argue that they are one property.

Mojisola

trickydicky802 wrote: »

In theory, yes. But in practice, since his intention is to eventually move into the cottage+house when he eventually inherits them then CGT will only be an issue if he does decide to sell.

If you go ahead with your plans to move into the cottage and for him to live in the house, his tax liability will continue.

trickydicky802

Yalpsmol wrote: »

Does your son own his property currently? So far it sounds like a poor deal for him....being gifted a property with sitting tennants, that he cant live in, (potentially) losing FTB status. If he wants to buy a home he might have 10 years as a landlord , owning 2 homes. That's difficult financially with paying tennants let alone not paying. Who will be paying to maintain the cottage that you and your parents are living in?

Yes, son owns his own flat (we gifted him the cash to buy it outright 8 years ago, so no longer any PET liability).


The 'tenant/landlord' thing is also a bit extreme. We're talking about a family here, not commercial/for profit arrangements. I'm sure many would advise against allowing my parent to live in our 'granny annexe' with no formal tenancy agreement but it has worked extremely well for the past 12 years and is surely better than packing them off to an old folks home?



What I'm considering is gifting the 'annex' part of our house to our son ahead of him inheriting it and, eventually, wanting to live in it. Yes, it will have 'sitting tenants' but they are his family and he'll incur no costs because they will be paying the bills and any necessary maintenance.


Yes, there are all manner of scenarios where things could go awry, but we can't cover every possible situation that children might get themselves into can we? We can only give them the best start and support in life that we can. Ultimately, it's their life to live. But we are a fairly close-knit family that believes 'blood is thicker than water' and that you always do right for your family.