Gifted property from parent

dcc0311

I have recently been discussing with my mother about her signing over 50% of the property she owns without a mortgage. 

The idea behind this is to remove from IHT element from the estate and make me 50% owner on the deeds. 

For clarity the following would be our intention;

-Gift me 50% of property
- both live in the property (we already do currently)
- contribute equally to household bills

I would however like to contribute for this 50%, so our idea was for me to gift monthly money to my mother indefinitely until she passes away. That would help her retirement and also make us both comfortable that I have contributed money against being gifted a share of the property. I have seen that giving parents to help with their income is non taxable hence taking this route.

The remaining 50% would then form part of the estate upon her death.

So the main question is if this is a possible approach? 

dcc0311

I have recently been discussing with my mother about her signing over 50% of the property she owns without a mortgage. 

The idea behind this is to remove from IHT element from the estate and make me 50% owner on the deeds. 

For clarity the following would be our intention;

-Gift me 50% of property
- both live in the property (we already do currently)
- contribute equally to household bills

I would however like to contribute for this 50%, so our idea was for me to gift monthly money to my mother indefinitely until she passes away. That would help her retirement and also make us both comfortable that I have contributed money against being gifted a share of the property. I have seen that giving parents to help with their income is non taxable hence taking this route.

The remaining 50% would then form part of the estate upon her death.

So the main question is if this is a possible approach? 

Keep_pedalling

The big downside I see is what happens if your situation changes and you end up moving out. Any house you buy while owning half of your family home will cost you in additional tax for buying a second home and if you have never owned a home before you will also loose your first time buyer status.

Have you actually established if your mother’s estate would actually be subject to IHT? If she is divorced or single then (assuming the current home is worth at least £175k) her estate would need to exceed £500k before IHT kicks in. If she is a widow it could be double that.

Keep_pedalling

I have answered this question in your identical thread. Please don’t duplicate threads across different boards it is far better to keep all replies in a single thread.

Brie

Anythings possible but there are some considerations....

Like deprivation of assets perhaps?  If mom needs care the local authority may object to paying for something when she has given an asset (or a portion of it) away.  Sounds like she's not that rich if your saying paying her something would make her retirement more comfortable.   If the LA takes against you and mom needs their financial support they can get quite sticky.  If you are living there and over 60 many LAs won't try to get you to move out or sell.  

For you - stamp duty to be paid by you perhaps?  Maybe not if it's a gift but it sounds like it isn't really.

What if you decide you want to sell, move in a boy/girlfriend, marry, get divorced?  What if she does any of those things?  A solicitor will obviously need to assist with all the legal niceties.  

So is IHT really an issue?  No talk of your dad/her husband or other partner so I'm assuming she owns the place out right and there's no other tax exemption possible?  

And while you're talking to the solicitor(s) don't forget to have wills and POAs for both of you in place.  

dcc0311

i have already owned a home so that doesn't apply anyway. I have no need to move out and if i did i would buy a second home or my wife could as she wont be named on this. 

yes it is over the IHT threashold

Keep_pedalling

Just read your September thread, which has just answered my questions. As her estate is well below the current IHT exemptions there is zero tax benefit in doing this and zero benefit to your mother either. 

Previously you said your mother wanted to release some equity from the house, so why not just buy a share of her home, as that gives her a nice chunk of liquid assets to enjoy herself in her senior years?

Marcon

dcc0311 said:

I have seen that giving parents to help with their income is non taxable hence taking this route.

What exactly have you read, I wonder - could you give the link?

msb1234

Do you not already contribute as you’re living in your mother’s house? 

_Penny_Dreadful

dcc0311 said:

i have already owned a home so that doesn't apply anyway. I have no need to move out and if i did i would buy a second home or my wife could as she wont be named on this. 

yes it is over the IHT threashold

As a married couple the jointly owned property with you mum would mean your wife’s purchase would be subject to the higher rate of SDLT/LTT/LBTT. 

Is your mum’s estate likely to be anywhere near the IHT threshold? 

dcc0311

_Penny_Dreadful said:

dcc0311 said:

i have already owned a home so that doesn't apply anyway. I have no need to move out and if i did i would buy a second home or my wife could as she wont be named on this. 

yes it is over the IHT threashold

As a married couple the jointly owned property with you mum would mean your wife’s purchase would be subject to the higher rate of SDLT/LTT/LBTT. 

Is your mum’s estate likely to be anywhere near the IHT threshold? 

yes the house is valued between 800 and 1.2m and then any cash left over. So some of the thinking was do gift me 50% so that the estate would drop below the IHT threshold. however its a shame not to benefit for my mother in the majority of her money being tied in the property asset, hence me buying the share from her but without a mortgage or without falling short on any rules/regulations.

To clarify my mother is a widow and my stepfathers allowances were never used.