Transfer of Property to Child (Outstanding Debts on Property)

kenchov1

Hi Everyone,

So Im looking to transfer my house to my son, we are becoming older now and I think its the best thing. One small problem that I would like to know about so that I can make the correct moves if anyone can help I owe two charges on the house.

6K charge to blackhorse
1k to welcome finance 

What would happen if I was to start to change ownership over?

sammyjammy

Have you researched the pitfalls of this?  Is your son married?  Ownership cannot transfer until the two charges are settled.

p00hsticks

kenchov1 said:

So Im looking to transfer my house to my son, we are becoming older now and I think its the best thing.

Why ? What are you  trying to achieve ?

This often isn't a good idea.

If you are looking to avoid IHT, then (unless your son lives with you) if you continue to live in the property without paying your son a market rent, then it's a 'gift with reservation' and continues to be part of your estate for inheritance tax purposes.

If you are looking to avoid possible future care home fees, then it can be considered as a 'deprivation of benefit' in which case the local authority will act as if you still owned the property. 

Unless your son is living with you, when he eventually comes to sell the property he will potentially be liable to Capital Gains Tax from the point at which you gave him the house.

If your son doesn't yet own his own property, he'll be excluded from any first time buyer incentives going forward.

If your son gets into financial difficulty, goes bankrupt or gets divorced then the house could end up having to be sold from under you, leaving you homeless.

kenchov1

My son is not married no. He is single so it would be solely in his name. 

Yes we have looked at the pitfalls and done some research but I can seem to find anything with regards to these two small charges. 

The house is worth roughly 120K 

[Deleted User]

kenchov1 said:

My son is not married no. He is single so it would be solely in his name. 

Yes we have looked at the pitfalls and done some research but I can seem to find anything with regards to these two small charges. 

The house is worth roughly 120K 

If those two lenders have debts secured against the property then they're not going to let you transfer ownership unless you settle the debts first. 

If you've looked at the pitfalls then I can't fathom why you'd think it's a good idea unless you are purposely trying to be as tax inefficient as possible.

kenchov1

He is my only son and no he does not live with us he rents at the moment. We are looking to give him the house and then he can move back and we can look to rent somewhere else. This would allow him to get onto the property ladder. 
Yes care home fees are starting to play on our mind a little. Thats correct. 
We have considered signing it over and then paying my son the "market value" 

kenchov1

To be honest in my situation there are no pitfalls as we would be possibly looking to move out..

I am just asking what I can do with those 2 secured debts and what to do.

FreeBear

p00hsticks said: If your son gets into financial difficulty, goes bankrupt or gets divorced then the house could end up having to be sold from under you, leaving you homeless.

Or takes out a loan using the property as security and then fails to keep up with the repayments. Property gets repossessed, occupants evicted.

Your home is your most valuable asset. Don't take risks, and don't try looking in to the crystal ball and saying "that won't happen".

kenchov1

I appreciate the advice. I am only asking about the secured debts. Is there anyway we can transfer with those attached?

Slithery

No. You'll have to pay them off before you're allowed to transfer the property.

kenchov1

Slithery said:

No. You'll have to pay them off before you're allowed to transfer the property.

Thank you very much, You have cleared that up for me. I will go about sorting this now. That was really my only question. You are a star