Inheritance Tax / putting part of home in children’s names.

xylophone

Because you are still living in it the gift, because that is what it is, will be a gift with reservation in that you will continue to benefit from it. It will still, therefore, form part of your estate. 

Not necessarily.

Read link in my post above.

See also

https://www.clarkewillmott.com/insights/wills-inheritance-tax-and-adult-children-living-at-home/

[Deleted User]

xylophone said:

Because you are still living in it the gift, because that is what it is, will be a gift with reservation in that you will continue to benefit from it. It will still, therefore, form part of your estate. 

Not necessarily.

Read link in my post above.

See also

https://www.clarkewillmott.com/insights/wills-inheritance-tax-and-adult-children-living-at-home/

Yes - the fact that the sons are still living in the home escaped me. 

However, as mentioned, they are more likely than not to seek alternative accommodation and that makes the plan worthless. 

Flugelhorn

DJ23 said:

Need to do something so no IT to pay. 

You won't have to pay it - your estate will. Just as our estate may well do  - we swapped our large house for a few smaller houses and will give  one each to the offspring (then aim to live 7 years)  we then will make sure that there is enough cash to pay any IHT 

Keep_pedalling

DJ23 said:

Need to do something so no IT to pay. 

If you actually want some helpful suggestions please answer the following questions

How much is your house worth?
What is the value of your other assets?
What is your marital status?

If you are actually in IHT territory then gifting makes sense providing it is not your home you are giving away. 

Grumpy_chap

DJ23 said:

Hello, now house prices have gone up considerably where I live I’m now in the IT bracket. A few yrs ago it would have been unthinkable I would be over the limit.

I have 2 sons (both in their 30’s) living at home with me. Is putting part of my home in their names as well as mine a good idea? Or is gifting part of it better to do?

Questions of this nature arise fairly frequently.
Gifting your home (or part of it) to avoid IHT may not achieve the objective and may give rise to other taxation considerations.  Have you considered the following possibilities?

• Will your Estate fall liable for IHT once all allowances are considered (included transferred allowance from spouse if appropriate)?
• Even if your Estate would fall liable for IHT if you depart this world tomorrow, will that still be the case if you live to a ripe old age?  (Supplement normal standard of living through down-sizing, care costs, etc.)
• GwR (Gift with Reservation) may apply - particularly if your children leave home
• DoA (Deprivation of Assets) may apply - particularly if your foreseeably might require care
• How will you manage downsizing if you wish to leave the family home for a bungalow but your two sons wish to remain in the family home?
• SDLT may be payable on the transfer now to your two sons.
• Your two sons may lose future FTB status if they wish to leave the family home.  They may also suffer the second property surcharge given they already own part of a property.
• If your two sons move out of the family home, they may subsequently become liable for CGT when the family home is eventually sold (the period beyond which it was the son's principal private residence).
• The sons own a property and this may affect any future means-tested benefits claims they may need to make.
• The sons may marry and then divorce (or other relationship breakdown) and the spouse make a claim on the proportion of the family home as an asset of the relationship.
• What if one of the sons pre-deceases you?  Their proportion of the family home will then be an asset of their Estate and will follow the son's Will (or intestacy rules).
• Will you pay rent for part of the property that belongs to your sons but used by you?  (This might only become a consideration if the sons move out.)

This is not such a simple process as it may have initially seemed to be.

Tucosalamanca

If you really are into the realms of IHT and not in a position to gift, pensions might be an option?
Alternatively, perhaps look at taking life insurance to the value of potential tax liability?
Personally, I'd take professional advice, there are lots of options depending on your situation.

DJ23

I need to see someone well versed in such matters!!! 

     People work all their lives, are careful with money, taxed every which way and then more taxes when dying. 

    IT hasn’t gone up for 14 yrs. but house prices have.
      I’m single. I have some savings inherited from mother around £150,000 and home will need valuing. Prob in the 350,000-450,000 ball park. Needs some sprucing up.

Grumpy_chap

DJ23 said:

I need to see someone well versed in such matters!!! 

     People work all their lives, are careful with money, taxed every which way and then more taxes when dying. 

    IT hasn’t gone up for 14 yrs. but house prices have.
      I’m single. I have some savings inherited from mother around £150,000 and home will need valuing. Prob in the 350,000-450,000 ball park. Needs some sprucing up.

Well, to find someone well versed in such matters, you can locate suitable professional advisors through an internet search on the lines of "IHT planning <your town>"

However, you have been given some good areas of consideration plus very pertinent questions upthread and not yet responded to any of the queries.
The most relevant is whether you will fall into IHT territory (by the time of death) plus your marital status and whether any spouse / former spouse had unused IHT allowances that transfer to yourself.

Even with your figures, let's take the middle of your house valuation £400k plus £150k cash assets, that's 550k.
Assuming no spouse / former spouse, you will have £325k NRB plus £175k PPR relief, so that's £500k.
Will you still be in IHT territory by the time of departure?  Will you have spent down the £150k cash in living / care costs?  You may have large pension that exceeds outgoings, so the £150k cash may have grown?

There are no questions asked in the thread that a professional advisor will not need to have the answers to.
Contributors to the forum may be able to provide some further advice if you provide some further detail, and you may be able to avoid (or minimise) the costs of professional advice.

Finally, don't let the IHT tail wag the dog.

Keep_pedalling

DJ23 said:

I need to see someone well versed in such matters!!! 

     People work all their lives, are careful with money, taxed every which way and then more taxes when dying. 

    IT hasn’t gone up for 14 yrs. but house prices have.
      I’m single. I have some savings inherited from mother around £150,000 and home will need valuing. Prob in the 350,000-450,000 ball park. Needs some sprucing up.

But you have never been taxed on the gain in property value or the inheritance from your mother have you, and those are the reasons is why your estate may pay IHT. As well as the NRB you also have the residential NRB which takes your exemptions up to £500k, so at the top end of your estimate £100k would be subject to IHT, at the bottom none of of would be. 

If you are going to make gifts it would be better to do it with some of your cash savings not a share of your home. £50k each would go a long way to a deposit for their own place, a share of your home is unusable until it is sold.

Did your mother die within the last 2 years?

Tucosalamanca

Keep_pedalling said:

If you are going to make gifts it would be better to do it with some of your cash savings not a share of your home. £50k each would go a long way to a deposit for their own place, a share of your home is unusable until it is sold.

Kids are in their thirties.
Not only would the gifts avoid (or reduce) IHT, the funds could be put into LISAs or pensions and generate an immediate uplift in value from govt bonuses or tax relief (which is how I gift money to my kids).