Gifted a property

pigstrotter3

Evening all 

I’m after some advice please. My father has gifted me a property that he owns which has tenants in situ. I don’t intend to move into the property and intend to keep renting the property out.I live in private rented accommodation and claim universal credit. I have limited capability for work and work-related activity. 

Will this affect my universal credit in any way? 

Many thanks 

Spoonie_Turtle

pigstrotter3 said:

Evening all 

I’m after some advice please. My father has gifted me a property that he owns which has tenants in situ. I don’t intend to move into the property and intend to keep renting the property out.I live in private rented accommodation and claim universal credit. I have limited capability for work and work-related activity. 

Will this affect my universal credit in any way? 

Many thanks 

Yes.

The capital you have in property will end your UC claim if it's over £16,000.
It can only be disregarded if it's occupied by a close relative who has LCW and/or has reached state pension age, or you are actively trying to sell it.

NedS

Yes, you will need to declare you have a property that is rented out, and if the value of the property takes your capital to more than £16,000, your claim for UC will close.

Caz3121

hopefully the rental income will be enough to replace the lost benefits, if not this was a very bad decision.
As an aside - are you aware of all your responsibilities as a landlord?

NedS

Caz3121 said:

hopefully the rental income will be enough to replace the lost benefits, if not this was a very bad decision.
As an aside - are you aware of all your responsibilities as a landlord?

Not necessarily - in the long term it could be a great decision if it avoids losing the property to care costs, or saves on inheritance tax. But the short term implication will likely be that their claim for UC must end.

freesha

This doesn't sound very sensible, especially seeing as you now are running a residential lettings business. Do you have any experience of this?

peteuk

NedS said:

Caz3121 said:

hopefully the rental income will be enough to replace the lost benefits, if not this was a very bad decision.
As an aside - are you aware of all your responsibilities as a landlord?

Not necessarily - in the long term it could be a great decision if it avoids losing the property to care costs, or saves on inheritance tax. But the short term implication will likely be that their claim for UC must end.

If anything should happen in the next few years HMRC will retrospectively look at the situation.  I want o say 6 yrs, but I’m not 100% sure.

TELLIT01

peteuk said:

NedS said:

Caz3121 said:

hopefully the rental income will be enough to replace the lost benefits, if not this was a very bad decision.
As an aside - are you aware of all your responsibilities as a landlord?

Not necessarily - in the long term it could be a great decision if it avoids losing the property to care costs, or saves on inheritance tax. But the short term implication will likely be that their claim for UC must end.

If anything should happen in the next few years HMRC will retrospectively look at the situation.  I want o say 6 yrs, but I’m not 100% sure.

Not just HMRC.  We don't know the age of the father, but if he should need to go into care in the next few years it's possible that signing over property would be classed as deprivation of capital.  A whole can of worms has been opened up by signing the property over.

Keep_pedalling

TELLIT01 said:

peteuk said:

NedS said:

Caz3121 said:

hopefully the rental income will be enough to replace the lost benefits, if not this was a very bad decision.
As an aside - are you aware of all your responsibilities as a landlord?

Not necessarily - in the long term it could be a great decision if it avoids losing the property to care costs, or saves on inheritance tax. But the short term implication will likely be that their claim for UC must end.

If anything should happen in the next few years HMRC will retrospectively look at the situation.  I want o say 6 yrs, but I’m not 100% sure.

Not just HMRC.  We don't know the age of the father, but if he should need to go into care in the next few years it's possible that signing over property would be classed as deprivation of capital.  A whole can of worms has been opened up by signing the property over.

Only if he had no other assets, which is unlikely as this is a rental property not his home. 

Keep_pedalling

peteuk said:

NedS said:

Caz3121 said:

hopefully the rental income will be enough to replace the lost benefits, if not this was a very bad decision.
As an aside - are you aware of all your responsibilities as a landlord?

Not necessarily - in the long term it could be a great decision if it avoids losing the property to care costs, or saves on inheritance tax. But the short term implication will likely be that their claim for UC must end.

If anything should happen in the next few years HMRC will retrospectively look at the situation.  I want o say 6 yrs, but I’m not 100% sure.

There is no IHT downside to gifting. Best case outcome, farther lives more the 7 years and IHT is reduced, worst cast outcome, father dies within the next 7 years and the IHT is the same as it would have been if no gift had been made.

The big tax issue for the OPs father could be CGT. If the value of the house has increased since the father purchased it then that gain is taxable based on current market value.

Suzycoll

pigstrotter3 said:

Evening all 

I’m after some advice please. My father has gifted me a property that he owns which has tenants in situ. I don’t intend to move into the property and intend to keep renting the property out.I live in private rented accommodation and claim universal credit. I have limited capability for work and work-related activity. 

Will this affect my universal credit in any way? 

Many thanks 

yes . Any changes in circumstances need to be declared. Assuming you will be getting income from  the tenants? this also needs to be declared . A new UC assessment will be done