Gifting a flat to my son

Natruth

It is an old flat in an area where prices arnt that high mind. 

saajan_12

Natruth said:

30 years ago my husband and I bought our first home, a flat. When we remortgaged to a house we kept the flat, which we have finished paying for. We always said it was for my son.  He lives there with his partner, who has just finished her 5 years of visa applications from NZ and has indefinite leave to stay. This has been very expensive so thankfully they had the flat to live in as they have also had 2 children in this time. I now want to sign the property over to him, someone suggested this may not be a good idea if they wanted to move and get a mortgage, although they would sell and have a deposit. The property is worth about £80,000. I have my own house and am only in my early 50s. How do I go about doing this.?

Its swings and aroundabouts whether you gift the property over now or wait until son wants to move. Each of the factors will vary based on your actual situation eg if inheritance tax is relevant, how likely son is to move, etc.

If you gift the flat to son now, and assuming son may want to move in x years then 
* CGT lower: you pay the CGT to date, but not for any further appreciation. Son doesn't pay from CGT as he lives there. 
* IT lower: if you survive the next 7 years, then there's no inheritance tax on the gift. 
* SDLT higher: if son wants to move, they will not be FTBs so will pay more SDLT for the next property
* LISA unavail: If son wants to move, they can't use a Lifetime ISA as it won't be their first home

If son continues living there rent free, and then if / when son wants to move, you sell and gift the cash then
* CGT higher: you pay the CGT to date plus the next x years giving more time for the value to appreciate and for the tax to increase, as the property is not owner occupied.
* IT higher: the gift is made at a later date, so you'd have to survive longer to avoid inheritance tax (note only a concern if your estate will be large enough to trigger inheritance tax) 
* SDLT lower: if son wants to move, they will be FTBs so will pay less SDLT for the next property (upto a 500k property)
* LISA avail: If son wants to move, they can use a Lifetime ISA as it will be their first owned home (assuming they satisfy other conditions

canaldumidi

Good evaluation above, but note all based on current tax rules. These may change in the future (eg FTB SDLT rates, LISA rules, IHT rates etc)

Natruth

I have an Accountant working on the CGT. I am going to sign the property over to my grandchildrens mother, this way my son could still apply for a first time buy in the future.  I am thinking of doing the sign over myself,  do you foresee any problem? Also because she is from NZ originally but does have residency status.  Yes I trust her. Thanks for the advice. 

SDLT_Geek

Natruth said:

I have an Accountant working on the CGT. I am going to sign the property over to my grandchildrens mother, this way my son could still apply for a first time buy in the future.  I am thinking of doing the sign over myself,  do you foresee any problem? Also because she is from NZ originally but does have residency status.  Yes I trust her. Thanks for the advice. 

Your grandchildren’s mother is not married to your son then?  If they are married or civil partners then your idea does not work for SDLT.

user1977

SDLT_Geek said:

Natruth said:

I have an Accountant working on the CGT. I am going to sign the property over to my grandchildrens mother, this way my son could still apply for a first time buy in the future.  I am thinking of doing the sign over myself,  do you foresee any problem? Also because she is from NZ originally but does have residency status.  Yes I trust her. Thanks for the advice. 

Your grandchildren’s mother is not married to your son then?  If they are married or civil partners then your idea does not work for SDLT.

And even if not, it'll be pointless if their next purchase is in joint names.

Slithery

And why the accountant? It's a simple calculation that you can do by yourself.

Natruth

So am I to understand that my son lives with his partner.  Should I sign to them both and Will I have to pay SDLT. The property is under the threshold amount I believe. 

Natruth

In the end they are getting a property, so are quids in. I thought I was doing a good thing and didn't expect things to sound so complicated. Although I feel ready to sign the deeds over myself, I've owned the property for 30 yrs,  so not expecting any issues. I don't see the need for a solicitor to do what I can do myself. I really do appreciate all the advice.. thank you

Slithery

Natruth said:

 I don't see the need for a solicitor to do what I can do myself.

I'm pretty sure that the freeholder will require a solicitor to carry out their part of the transaction, no matter how 'experienced' you believe that you are.