Adding names to a house

kenzie123

Hello,

My mum would like to put our names as official co-owners of her house. 
Is this quite an easy thing to do?
Is there a fee and who would do this officially as the mortgage has been paid so there is no bank tied to the house, my mum owns it in full.
She isn't sure who to approach about it.

Any guidance appreciated.

Also one of my sisters isn't a homeowner so she is concerned this would affected her as a first time buyer - is this correct?

thanks

ciderboy2009

Why does your mother want to do this?  If it's an attempt to avoid care home fees then it's unlikely to work (Google deprivation of assets).

Your sister is correct - she would lose any first time buyer incentives if she's already part-owner of a property.

Slithery

Why does she want to do this? It's usually a terrible idea.

kenzie123

There arciderboy2009 said:

Why does your mother want to do this?  If it's an attempt to avoid care home fees then it's unlikely to work (Googe deprivation of assets).

Your sister is correct - she would lose any first time buyer incentives if she's already part-owner of a property.

Hi - it's not to do with care home fees, she's quite able at the moment. 
Her will states that the house will come to some of her children but not all - I believe this is to make it less awkward in the future, so names are already on the property before her death.

Can I ask what you mean by deprivation of assets?

kenzie123

Slithery said:

Why does she want to do this? It's usually a terrible idea.

thanks for your response - we are looking at this now for pros and cons - 
can you please let me know why it is a terrible idea? Genuine question - what would be the downsides to this?

MaryNB

kenzie123 said:

There arciderboy2009 said:

Why does your mother want to do this?  If it's an attempt to avoid care home fees then it's unlikely to work (Googe deprivation of assets).

Your sister is correct - she would lose any first time buyer incentives if she's already part-owner of a property.

Hi - it's not to do with care home fees, she's quite able at the moment. 
Her will states that the house will come to some of her children but not all - I believe this is to make it less awkward in the future, so names are already on the property before her death.

Can I ask what you mean by deprivation of assets?

If she gives away assets that will reduce the amount she can contribute towards a care home it could seen as a deprivation of assets. If the council believes that concern over future care home costs formed part (it doesn't have to be all) of her decision to give you her property they will deem it to be depravation of assets. In this case she may be assessed for a care home based on the assets she gave away and the council may not help her with a care home place if she can no longer afford it.

user1977

kenzie123 said:

Slithery said:

Why does she want to do this? It's usually a terrible idea.

thanks for your response - we are looking at this now for pros and cons - 
can you please let me know why it is a terrible idea? Genuine question - what would be the downsides to this?

Apart from deprivation of assets:

• kids losing FTB privileges as already mentioned
• property taken into account as an additional one (for SDLT surcharge purposes) when anybody buys another property
• Capital Gains Tax liability (as the principal residence exemption won't apply to the kids)
• property gets involved in the kids' divorces / bankruptcies etc
• everyone would need to reach agreement whenever anything happens to the house in the future
• doesn't help Inheritance Tax liability (unless mum is paying a market rent for the kids' share)

What's the "awkwardness" about it? Sounds like you'd just be moving the awkwardness around rather than avoiding it.

p00hsticks

kenzie123 said:

Slithery said:

Why does she want to do this? It's usually a terrible idea.

thanks for your response - we are looking at this now for pros and cons - 
can you please let me know why it is a terrible idea? Genuine question - what would be the downsides to this?

1). If you and your sister are not living in the property you will lose any first time buyer incentives you may otherwise be entitled to.

2) If your share of the property is worth more than £40,000 then you and you sister may be liable to pay an additional 3% stamp duty on any other property you buy.

3). If you and your sister are not living in the property then when it is eventually sold you and your sister will be liable to Capital Gains Tax on any increase in value from the time it is given to you.

4). If you or your sister get divorced or go bankrupt it will be considered as an asset and your mother may find that her home has to be sold from under her.

5). If your mother continues living in the house and does not pay you and your sister market rent for your share of the property then it is a 'Gift with reservation' and will remain as part of her estate for Inheritance Tax Purposes.

6). As MaryNB describes above, if your mother gives away part of her home and then later requires care then any funding from the local authority is likely to 'rewind' the gift and still consider her as owning the entire property for funding calculation purposes.

Those are the con's I can think of off the top of my head. I can't think of a single pro - I'm not even convinced that it would make the handling of her estate after her death any easier given that you say she has a will in place.