Property Transfer - No Mortgage involved.

StewartH

Hi. Theoretical question as it isn't me but someone close...
I am looking to transfer ownership of my house (main residence) to me and my 2 children. I understand the IHT rules and the 7 year "countdown" but is it really as simple as 2 forms to the Land Registry? I have seen AP1 and TR1, and it looks like approx £50 in fees. SDLT is a bit confusing though. There will be no money changing hands and the owner will still reside in the house, the children do not live there. There are no mortgages or charges on the house.
Grateful for any advice...

davidmcn

Are your children happy with the CGT and SDLT implications of them owning this property?

getmore4less

What 7 year countdown?

It won't start if it is a gift with reservation which it will be if the kids don't live there and the current owner continues to live there. 

AnotherJoe

What does this person hope to gain from this arrangement ? 

StewartH

The idea was to gift the house to the kids and pay the minimum possible in taxes in the future, whether that be IHT, CGT, or SDLT
Thanks for your responses so far.

getmore4less

Won't work most likely end up in more taxes. 

AnotherJoe

StewartH said:

The idea was to gift the house to the kids and pay the minimum possible in taxes in the future, whether that be IHT, CGT, or SDLT
Thanks for your responses so far.

That's almost certain to have the opposite effect.

They would likely pay CGT whereas they  wouldn't before, unless the house is worth millions.
The estate is unlikely to pay IHT unless you are worth a lot in which case give that away, not the house 
they would have to pay extra SDLT if they ..... you know what this would take ages to type all the downsides out and there are no upsides
It's a dumb idea don't do it,

V2001

There be no sdlt to pay as its a pure gift to yr sons and for no consideration,  also you have no mortgage. So you or your sons pay no sdlt as its a pure gift.
The issue you will have is with cgt when they ever come to sell the property its not their main residence. It will also be a gift with reservation for you for iht. 
The situation would be different if the sons lived with you and if you shared expenses there be no issues, and even be a good idea if you all wanted to live together  ..

davidmcn

V2001 said:

There be no sdlt to pay as its a pure gift to yr sons and for no consideration,  also you have no mortgage. So you or your sons pay no sdlt as its a pure gift.

The SDLT issue is that any future purchase they make will be of an additional property, so will attract the 3% surcharge. And it also loses their first time buyer "virginity", if they still have that.

V2001

davidmcn said:

V2001 said:

There be no sdlt to pay as its a pure gift to yr sons and for no consideration,  also you have no mortgage. So you or your sons pay no sdlt as its a pure gift.

The SDLT issue is that any future purchase they make will be of an additional property, so will attract the 3% surcharge. And it also loses their first time buyer "virginity", if they still have that.

Yes agree it would affect future purchase. But op also said children dont live at home so I assume they had their own place already. Which if its the case there still be no sdlt to pay if he gifted the share over. However on future purchase of any other properties it will attract sdlt on those purchases for the children.

AnotherJoe

V2001 said:

There be no sdlt to pay as its a pure gift to yr sons and for no consideration,  also you have no mortgage. So you or your sons pay no sdlt as its a pure gift.
The issue you will have is with cgt when they ever come to sell the property its not their main residence. It will also be a gift with reservation for you for iht. 
The situation would be different if the sons lived with you and if you shared expenses there be no issues, and even be a good idea if you all wanted to live together  ..

My comment was "extra" SDLT eg when they come to buy a property (if they haven't already).  They wouldn't actually pay more if they already had a property and then sold that to buy another. So many  permutations and possibilities but generally all downside or at best neutral, eg pointless. 
This is classic "person tries to avoid taxes they most likely will never be liable for and ends up incurring the very taxes they tried pointlessly to avoid" territory.