Gifted property from parent

dcc0311

Marcon said:

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

ou can make regular payments to another person, for example to help with their living costs. There’s no limit to how much you can give tax free, as long as:

• you can afford the payments after meeting your usual living costs
• you pay from your regular monthly income

These are known as ‘normal expenditure out of income’. They can include:

• paying rent for your child
• paying into a savings account for a child under 18
• giving financial support to an elderly relative

If you’re giving gifts to the same person, you can combine ‘normal expenditure out of income’ with any other allowance, except for the small gift allowance.

For example, you can give your child a regular payment of £60 a month (a total of £720 a year) as well as using your annual exemption of £3,000 in the same tax year.

Keep_pedalling

dcc0311 said:

_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. 

Your mother is asset rich but cash poor which  is not a great position to be in. Gifting her home would make her asset poor and cash poor which is an even worse position. A couple of options I would consider in your position. 1. You buy a share in her property (possibly at a discounted rate). She sells, buys a smaller home and gifting a portion of the proceeds keeping enough back to keep her comfortable in her old age.

dcc0311

Keep_pedalling said:

dcc0311 said:

_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. 

Your mother is asset rich but cash poor which  is not a great position to be in. Gifting her home would make her asset poor and cash poor which is an even worse position. A couple of options I would consider in your position. 1. You buy a share in her property (possibly at a discounted rate). She sells, buys a smaller home and gifting a portion of the proceeds keeping enough back to keep her comfortable in her old age.

But this is why i have planned to support her income. So she gifts me 50% and i pay her a monthly amount indefinitely until she dies. that way boosting her income. She has a comfortable pension so she isn't cash poor but would like to have more to enjoy life more. theres no need for her to move out or buy another property its more than large enough for us all

Savvy_Sue

dcc0311 said:

Keep_pedalling said:

dcc0311 said:

_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. 

Your mother is asset rich but cash poor which  is not a great position to be in. Gifting her home would make her asset poor and cash poor which is an even worse position. A couple of options I would consider in your position. 1. You buy a share in her property (possibly at a discounted rate). She sells, buys a smaller home and gifting a portion of the proceeds keeping enough back to keep her comfortable in her old age.

But this is why i have planned to support her income. So she gifts me 50% and i pay her a monthly amount indefinitely until she dies. that way boosting her income. She has a comfortable pension so she isn't cash poor but would like to have more to enjoy life more. theres no need for her to move out or buy another property its more than large enough for us all

But is it future-proof? If she were to lose mobility, for example. 

dcc0311

Savvy_Sue said:

dcc0311 said:

Keep_pedalling said:

dcc0311 said:

_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. 

Your mother is asset rich but cash poor which  is not a great position to be in. Gifting her home would make her asset poor and cash poor which is an even worse position. A couple of options I would consider in your position. 1. You buy a share in her property (possibly at a discounted rate). She sells, buys a smaller home and gifting a portion of the proceeds keeping enough back to keep her comfortable in her old age.

But this is why i have planned to support her income. So she gifts me 50% and i pay her a monthly amount indefinitely until she dies. that way boosting her income. She has a comfortable pension so she isn't cash poor but would like to have more to enjoy life more. theres no need for her to move out or buy another property its more than large enough for us all

But is it future-proof? If she were to lose mobility, for example. 

yes, its a very large property that can exist as 2 houses, one part is an extension which is single floor with all things needed in one room. 

these are considerations we have made, my question is about how best to approach the financial side. 

_Penny_Dreadful

dcc0311 said:

Keep_pedalling said:

dcc0311 said:

_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. 

Your mother is asset rich but cash poor which  is not a great position to be in. Gifting her home would make her asset poor and cash poor which is an even worse position. A couple of options I would consider in your position. 1. You buy a share in her property (possibly at a discounted rate). She sells, buys a smaller home and gifting a portion of the proceeds keeping enough back to keep her comfortable in her old age.

But this is why i have planned to support her income. So she gifts me 50% and i pay her a monthly amount indefinitely until she dies. that way boosting her income. She has a comfortable pension so she isn't cash poor but would like to have more to enjoy life more. theres no need for her to move out or buy another property its more than large enough for us all

You’re getting into murky waters. ST is based on the consideration paid. Whilst your mum gifts you 50% of the property the consideration is zero but the monthly amount you intend to pay her sounds like a consideration and I suspect HMRC will see it that way too. I don’t know what other assets your mum has but I think if IHT could be an issue then she should take professional advice from someone specialising in estate planning rather than attempting to DIY it. 

Keep_pedalling

dcc0311 said:

Keep_pedalling said:

dcc0311 said:

_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. 

Your mother is asset rich but cash poor which  is not a great position to be in. Gifting her home would make her asset poor and cash poor which is an even worse position. A couple of options I would consider in your position. 1. You buy a share in her property (possibly at a discounted rate). She sells, buys a smaller home and gifting a portion of the proceeds keeping enough back to keep her comfortable in her old age.

But this is why i have planned to support her income. So she gifts me 50% and i pay her a monthly amount indefinitely until she dies. that way boosting her income. She has a comfortable pension so she isn't cash poor but would like to have more to enjoy life more. theres no need for her to move out or buy another property its more than large enough for us all

You would be creating a complex financial arrangement there and I am pretty sure your payments would be taxable. There is also the potential for this to go horrible wrong. You won’t for instance be able to pay her for life if through accident or illness you are unable to work. There is also the risk of you pre- deceasing her. 

Mojisola

dcc0311 said:

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

-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.

I would keep the two things completely separate.  Linking them is completely unnecessary and could create complication.

Mother gifts you 50% of the property you both live in.

You offer to pay a higher proportion of the household bills with regular reviews so that the amount can be altered if your circumstances change.

sheramber

Your mother's gifted  5O% share would be a gift with reservations and would remain in her estate for IHT.

lr1277

I am wondering if your mother would need to pay CGT on the gift portion. Say the house when bought was £500k and it is now worth £1M, that is a £500k increase. Would she have to pay CGT on the whole value of the gift or even CGT on 50% of the property’s increased value? You need to get professional advice or maybe another poster will be able to advise.