Gifting houses to children

Brie

LightFlare said:

p00hsticks said:

Sireewiree said:

Yes, she has some (£100k or so). I’m not sure about how the gifting sits should she use up her money (v healthy at present, but good point, we never know). 

£100k doesn't stretch that far if it gets to the point of self-funding residential care.......

probably only about 2 years in a reasonably decent place

Personally I would say 2 years is massively optimistic and "decent place" is a very fluid term.

MiL went into a care home that was costing £1k a week and that was 2 years back.  It was nice-ish, the staff very friendly so no problems that way but it may very well NOT be the sort your mom (or you) would choose.  Her brother in London care home a couple of years before that was definitely nice and costing about £3k a week.  So very likely £100k might only last 1 year - depending on standards and location.

Savvy_Sue

The OP might find this thread useful: https://forums.moneysavingexpert.com/discussion/6533941/putting-house-into-trust

There's some advice about who to consult for advice, and links to a couple of potentially useful articles. Different situation but same principles apply. 

Grumpy_chap

Sireewiree said:

My elderly mother owns two houses outright. One is the family home, the other is a holiday let. 

She has announced she wants to gift the houses to my brother and me (my brother has the family home, I have the let). 

While I’m aware of the 7 year gift tapering for IHT purposes, I’m unsure of other aspects. 

1.  Can she gift the houses? 

2.  What are the possible tax implications for my brother and me (and are they different for each house?). 

3.  Are there any other possible big traps that may make this idea problematic?

We would legally ensure she has a right to live in the family home as long as she wishes. 

Thanks in advance. 

Reiterate what others say about gifting her home - not wise at all.

If she gifts the holiday let, how will she pay the CGT liability arising on disposal?

Having been gifted the holiday let, what will you / your brother do with the holiday let?
You will incur future CGT on disposal of the holiday let.
You will lose any FTB stamp duty entitlement (if you are not already homeowners).
Having the holiday let will be considered an asset should you ever claim means tested benefits

Just some of the considerations.  "You" in the above means "you or your brother".

Keep_pedalling

Sireewiree said:

Thanks to all. 

What your comments emphasise for me is the need for her to get professional advice. My brother and I don’t need the money/property for any reason at the moment, but my mum has a bee in her bonnet about offloading the properties as ‘gifts’ (which may not be appropriate).  

There will be an IHT liability on the estate with the properties, and from my point of view, she needs IHT planning advice and we take it from there. 

Your inputs are really appreciated. Thanks. 

Are you sure about the IHT situation? If she is a Widow her estate could have up to £1M in exemptions, up to £500k if not.

if it is, gifting cash is always a better option than property, especially her home which unless she also paid full market rent would never drop out of her estate.

Marcon

Flugelhorn said:

I think that the "deprivation of assets" thing only becomes a thing if you do as you become likely to need care 

That was true some years ago, but not any more. See https://www.radiotimesmoney.com/retirement/hold-onto-your-house/

km1500

1. yes she can gift to houses to you there is no gift tax or anything like that in this country - anybody can gift anything they want to anybody else

2. there are no tax implications for you or your brother other than if the estate does not have enough funds to pay any inheritance tax due it maybe clawed back from you 

3. asbfor other implications there may well be a deprivation of assets question should your mother require means tested benefits

Keep_pedalling

km1500 said:

1. yes she can gift to houses to you there is no gift tax or anything like that in this country - anybody can gift anything they want to anybody else

2. there are no tax implications for you or your brother other than if the estate does not have enough funds to pay any inheritance tax due it maybe clawed back from you 

3. asbfor other implications there may well be a deprivation of assets question should your mother require means tested benefits

1. That is true but is not in the best interests of the giver, she could even lose her home in the case of her children dying before she does, going bankrupt or getting divorced. 

2. Not quite true, while there is no immediate tax issue for the OP there is for their mother, and it is likely to lead to a CGT liability for the OP in the future.  

3. That would be almost certain if she did not retain sufficient assets for her own needs. 

Hoenir

Presumably your mother intends remaining in the family home. In which case reservation of title rules kick in. Not possibly to have ones cake and eat it.  That loop hole was blocked many moons ago. 

theoretica

If she gifts the holiday let CGT becomes due at the time of the gift.

If she gifts her home, CGT will in future become due for the non-resident owner from the date of the gift.  And, as she continues to live there it will still be subject to inheritance tax, and as mentioned may still be taken into account when assessing paying for care etc.

I really doubt that this would work out as well as she hopes.  Possibly she has not taken into account that the tax people are one step ahead!