Gifting a property to my son.

56cheffy

I'm trying to find out the law regarding 'gifting' a property to my son, but keep finding conflicting information.

The house has no mortgage.

At the moment it is my main residence.

Upon gifting the property is stamp duty payable?

Do I have to by law pay rent at a  'going' rate as that of a similar property?

I am fully aware of the implications of 'falling out' with my son, so no need to go down that route.

Thanks

Pok3mon

Is this to avoid possible care home fees?

[Deleted User]

56cheffy said:

I'm trying to find out the law regarding 'gifting' a property to my son, but keep finding conflicting information.

The house has no mortgage.

At the moment it is my main residence.

Upon gifting the property is stamp duty payable?

Do I have to by law pay rent at a  'going' rate as that of a similar property?

I am fully aware of the implications of 'falling out' with my son, so no need to go down that route.

Thanks

Why is gifting in inverted commas?  Are you gifting the property or is it not really a gift?

Assuming it is actually a true gift then there is nothing stopping you from giving away your home although quite why you'd want to do it is beyond me.  If your son is not paying any consideration for the property then he will not fact a SDLT bill.  If the property has not been your only or main home the entire time you have owned it then you might face a CGT bill even if you give the property away for nothing.

There is no law saying that after you have gifted your home to your son that you have to pay any rent.  I wonder if you are perhaps thinking of Pre-owned asset tax (POAT) and IHT whereby unless you pay market rent for living in the property after giving it away the value of the property will still be counted towards the value of your estate.

You might be fully aware of the implications of falling out with your son but if this is an attempt to avoid potential care home costs in the future then nil points.

SDLT_Geek

Lover_of_Lycra said:

If the property has not been your only or main home the entire time you have owned it then you might face a CGT bill even if you give the property away for nothing.

If OP is talking about the same property as in this post https://forums.moneysavingexpert.com/discussion/5886279/primary-residence-previously-btl#latest  then there is a considerable period when it was let.  For the purposes of capital gains tax there is a deemed market value on a gift to a family member.

But as @Lover_of_Lycra says, there should be no SDLT on a gift of a mortgage free property.

lookstraightahead

56cheffy said:

I'm trying to find out the law regarding 'gifting' a property to my son, but keep finding conflicting information.

The house has no mortgage.

At the moment it is my main residence.

Upon gifting the property is stamp duty payable?

Do I have to by law pay rent at a  'going' rate as that of a similar property?

I am fully aware of the implications of 'falling out' with my son, so no need to go down that route.

Thanks

are you staying in the property, and if so, why are you giving him your house?

56cheffy

Pok3mon said:

Is this to avoid possible care home fees?

No. it's is to limit my IHT.

Who_invited_her

You might be better mortgaging your property, interest only, and giving the money you raise to your son. That would reduce your estate for IHT.  You would have to pay the interest only mortgage but that might be a simpler solution.

GDB2222

56cheffy said:

Pok3mon said:

Is this to avoid possible care home fees?

No. it's is to limit my IHT.

I suggest that you speak to a STEP member, for paid advice. It's important not to fall foul of the gift with reservation rules. Plus, if the property increases in value whilst your son owns it, he could be in for a CGT charge later. It's possible to muck it up and create a CGT charge, whilst not having an effective gift for IHT purposes. 

This is rather a technical area to be seeking advice on a public forum.

https://www.step.org/

Keep_pedalling

56cheffy said:

Pok3mon said:

Is this to avoid possible care home fees?

No. it's is to limit my IHT.

Well if you are going to continue to live in it you are also going to have to pay him full market rent to avoid this being classed as a gift with reservation which will stay in your estate indefinitely. 

Counciltenant2021

I'm assuming you're gifting your son your home to avoid inheritance tax is that correct?

getmore4less

Gifting a property does not reduce the IHT liability if you are still living in it gift with reservation.
(Where is the son living?)

Paying market rent can reduce the liability but that just converts potential future IHT to current income tax liability.


Also as said this will not remove any CGT liability you have already accumulated.

from Aug 2018
I bought a house in 2007 which was rented out until May 2016, I then moved in and it became my primary residence.

~8-9years rented 5y occupied and counting.

NOTE: the CGT rules for rented have changes since that last post(link to it is above) so cant use those calculations.

Are you sure your estate is liable to IHT.

There are probably other ways to mitigate any liability. 

a bit more background(2016) 

https://forums.moneysavingexpert.com/discussion/5440955/adding-son-to-a-mortgage#latest

and even further back(2011)
https://forums.moneysavingexpert.com/discussion/3223052/can-i-add-my-sons-name-to-a-mortgage#latest
I am 54 and widowed, he is a single 20 yr old student.

Potential for upto  £1m nil rate band




10 years of IHT planning not a lot of progress.......