Buying House jointly with disabled daughter

Jacquelyn6229

We have an adult disabled daughter who lives with us. Her only income is PIP and Universal Credit. We are planning to sell our existing home and buy another house for us all. Can we name our daughter as a tenant in common with us for the new property or would this have any tax implications as it would be seen as a gift?

Brie

what gift is being made?  tax is for income (none included here) so not sure how that will be an issues

you might have a deposit from your previous house but that doesn't mean the proceeds are a gift to your daughter. 

If her income (which is fairly assured) is included for the mortgage that shouldn't be an issue (imo)

Bookworm105

as tenant in common she will own a specified % of the property which she has not "purchased" using her own money, so yes it is a gift. But, importantly, she will live with you, so it will be her "main/only residence" and you will be co-owning residents of it.

For inheritance tax (IHT) purposes yes it is a "gift with reservation" (GWR) as you are reducing your own capital before death, but continue to benefit from that money by virtue of living in the property yourself which that money (part) funded. As such the gift will remain as part of your estate - although with IHT thresholds these days your estate would need top be near 2 million plus before having to pay IHT was a real risk.
If you ever move out to another property and she continues to live there on her own, then the "reservation no longer applies and it becomes a simple gift, meaning if you live for a further 7 years after that change of circumstance date the money no longer forms part of your estate.


I have no idea whether that gift would have any impact on her benefit entitlements given it is unearned income, but is (partly) paying for the roof over her head.

Keep_pedalling

Bookworm105 said:

as tenant in common she will own a specified % of the property which she has not "purchased" using her own money, so yes it is a gift. But, importantly, she will live with you, so it will be her "main/only residence" and you will be co-owning residents of it.

For inheritance tax (IHT) purposes yes it is a "gift with reservation" (GWR) as you are reducing your own capital before death, but continue to benefit from that money by virtue of living in the property yourself which that money (part) funded. As such the gift will remain as part of your estate - although with IHT thresholds these days your estate would need top be near 2 million plus before having to pay IHT was a real risk.
If you ever move out to another property and she continues to live there on her own, then the "reservation no longer applies and it becomes a simple gift, meaning if you live for a further 7 years after that change of circumstance date the money no longer forms part of your estate.


I have no idea whether that gift would have any impact on her benefit entitlements given it is unearned income, but is (partly) paying for the roof over her head.

A gift of a proportion of a house to a child who lives at home is not necessarily a gift with reservation of benefit. 

Where did you get that £2M figure from, a married couple currently have combined exemptions of £1M.

Keep_pedalling

Jacquelyn6229 said:

We have an adult disabled daughter who lives with us. Her only income is PIP and Universal Credit. We are planning to sell our existing home and buy another house for us all. Can we name our daughter as a tenant in common with us for the new property or would this have any tax implications as it would be seen as a gift?

Are you going to need a mortgage to purchase the new house? 

What are you trying to achieve by doing this?

Albermarle

Jacquelyn6229 said:

We have an adult disabled daughter who lives with us. Her only income is PIP and Universal Credit. We are planning to sell our existing home and buy another house for us all. Can we name our daughter as a tenant in common with us for the new property or would this have any tax implications as it would be seen as a gift?

You can make gifts of any size to anybody. There is no gift tax in the UK ( although a lot of people seem to think there is).
The only possible implication is that gifts can affect IHT calculations on your estate after you and your spouse have died . Of course if you are unlikely to have enough money to pay IHT ( most do not) then it is not relevant.

However I would also be interested in the answer to this question.

What are you trying to achieve by doing this?

Jacquelyn6229

We would be cash buyers and the purpose of giving my daughter a share in the house would be to guarantee her a cash sum when the property is sold. If that is when I am dead then she would get this sum plus her share of whatever I leave to her and her siblings. Thanks for the comments so far. I am beginning to get a grip of the situation

Albermarle

Jacquelyn6229 said:

We would be cash buyers and the purpose of giving my daughter a share in the house would be to guarantee her a cash sum when the property is sold. If that is when I am dead then she would get this sum plus her share of whatever I leave to her and her siblings. Thanks for the comments so far. I am beginning to get a grip of the situation

Sounds like could be a bit complicated when you both die.
Your daughter will own a third of the property, and your estate two thirds. So this will complicate selling the house.
If just you and your spouse owned the property, then on second death the executor of your estate could then just sell the house in the normal way. Then all proceeds from the house and other assets distributed as per your will. Seems a simpler option ?