Gifting a Property for no consideration

Habib2342

Hello,

So my mother is thinking about retiring abroad . I'm ok with that. Big and ugly enough to look after myself by now( I think ). So thoughts now extend to dealing with her asset and savings and considering relative options.

1. She moves abroad taking her pension & savings/Investments with her but leaves ownership of her house in her name. That is going to cause an issue if and when she passes away abroad ( she's 79 with a plethora of health conditions and is slowly coming round to the idea the NHS are limited in what they can do for her). She has her sisters and other helpers back home to assist with day to day living. I've looked into it and obtaining a death certificate for a British citizen who passes away abroad will be very difficult to obtain in this particular country. So this will make it difficult to deal with her will and her property/remaining savings in the UK if I don't have a valid death ceritifcate.

2. So the only option I can see to avoid the above stress is for her to gift the property for no consideraton  to my brother and I so ownership passes to us. She can either continue living in the property or move abroad at her convenience. My brother and I can either rent out the property or selling it if and when she decides to leave. I've already sourced a quote from a solicitor but need to discuss this with him and our mother once I have all the facts to hand.
Renting it out would not be issue but selling will not be possible until the land registry have filed the change of ownership and based on what the solicitor has said, this could take up to 12 months. I'm fine with the principle or renting it out for 12 months and then selling once Land Registry have updated their records. 
The solicitor mentioned tax implications but I don't think there are any if the property is being rented out ( correct me if I'm wrong ). Tax issues may arise when the time comes to sell (CGT etc) but that's fine if and when the time comes to sell. Can anyone recommend a good tax advisor I can contact ?

Anyone got any experience of dealing with a property using this method ? keen to learn from other experiences.

thanks. . 

FlorayG

If you rent it out you pay 20% tax on the rent as it is income - if you already have a high income you may pay 40% on it. The solicitor may be talking about tax due to you getting a property for nothing; I don't know the ins and outs of that.
Also bear in mind 'renting out for 12 months' could turn into 'renting it out to someone who refuses to move out after 12 months'

p00hsticks

Habib2342 said:

The solicitor mentioned tax implications but I don't think there are any if the property is being rented out ( correct me if I'm wrong ).

You'd pay income tax on the rental income. And don't forget all the hoops that you'd need to jump through before renting it out (e.g. gas certificates, etc, dependant on which country the property is in)

Keep_pedalling

IHT may be a consideration if she dies within 7 years of gifting it. What is the value of the house? Will she still have sufficient assets to pay for any care she may need in the country she is planning to move too? 

Why cant she simply sell it once her move is definitely on?

Habib2342

FlorayG said:

If you rent it out you pay 20% tax on the rent as it is income - if you already have a high income you may pay 40% on it. The solicitor may be talking about tax due to you getting a property for nothing; I don't know the ins and outs of that.
Also bear in mind 'renting out for 12 months' could turn into 'renting it out to someone who refuses to move out after 12 months'

I'm ok with paying tax on the rental income . Also re: potential problem tenants, I've got experience of dealing with that so will rely on current housing laws if things get messy. and also aware of all the checks that need to be done before renting it out ( gas safety/electric checks etc). Property is in West London. estimated value is 500k but this is absed on recently sold properties in the same street that are in much better condition than ours. So it will likely go for less when the time comes to sell. 

She;s looking to go in Feb 2025 but selling as we all know can take many months. I figured its better to let ownership lie with my brother and I so we can either rent it out or sell if in our own time.

Hoenir

Habib2342 said:

 Tax issues may arise when the time comes to sell (CGT etc) but that's fine if and when the time comes to sell. 

If it's gifted at zero consideration then the entire net sales proceeds will be subject to the current rate CGT at the time. . 

Habib2342

Hoenir said:

Habib2342 said:

 Tax issues may arise when the time comes to sell (CGT etc) but that's fine if and when the time comes to sell. 

If it's gifted at zero consideration then the entire net sales proceeds will be subject to the current rate CGT at the time. . 

thats' fine. We'll pay our dues, but if there are  ways of mitigate the tax exposure legally, then its worth pursuing. 

pumas

Land Registry - if it is Transfer of Equity, just done that, took LR less than 3 weeks to update

Bookworm105

Hoenir said:

Habib2342 said:

 Tax issues may arise when the time comes to sell (CGT etc) but that's fine if and when the time comes to sell. 

If it's gifted at zero consideration then the entire net sales proceeds will be subject to the current rate CGT at the time. . 

wrong - it would be a disposal to a "connected person", so the CGT would be based on the gain from its market value at date of disposal to its actual selling price.

the fact it was a gift for no money does not make the whole proceeds equal to the taxable gain 

Bookworm105

Habib2342 said:

Hello,

So my mother is thinking about retiring abroad . I'm ok with that. 

1. She moves abroad taking her pension & savings/Investments with her but leaves ownership of her house in her name. That is going to cause an issue if and when she passes away abroad ( she's 79 with a plethora of health conditions and is slowly coming round to the idea the NHS are limited in what they can do for her). She has her sisters and other helpers back home to assist with day to day living. I've looked into it and obtaining a death certificate for a British citizen who passes away abroad will be very difficult to obtain in this particular country. So this will make it difficult to deal with her will and her property/remaining savings in the UK if I don't have a valid death ceritifcate.

2. So the only option I can see to avoid the above stress is for her to gift the property for no consideraton  to my brother and I so ownership passes to us. 

is her estate (including any allowances carried over to her from your father) above the IHT threshold?

if it is, then her gifting the property to you, given her apparent health and age, before she leaves the UK may not be the best solution as she may die before "completing" the 7 year rule.

might be worth her considering her move date in light of the new rules applicable to IHT after 6 April 2025 
Inheritance tax reforms for UK non-doms - Saffery

Habib2342

'is her estate (including any allowances carried over to her from your father) above the IHT threshold?

her estate consists of her house + her savings and investments. More than Likely this is above 325k but I don't know for sure until i've got access to her balances and the final price the house ends up being sold for, whenever that may be.