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Can you gift a house?
3 Answers
My Mum wants to give her house to me and my brother as a gift. can this be done? and at what cost?
she is 62 y-o, and is obviously concerned that should she need care in future years, that she may be expected to sell the family home to finance it. Having lived there for 40+ years, developed the property, paid off the mortgage, and paid her taxes all her life, she doesn't want to have to sell it. can we do anything?
House value approx �180k
she is 62 y-o, and is obviously concerned that should she need care in future years, that she may be expected to sell the family home to finance it. Having lived there for 40+ years, developed the property, paid off the mortgage, and paid her taxes all her life, she doesn't want to have to sell it. can we do anything?
House value approx �180k
Answers
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This is tricky.
She can of course give you the house as a gift, but if she continues to live in it she could be said to be deliberately disposing of her assets in years to come. This is called a 'gift with reservation' as she is reserving her right to live in it.
And if the house was sold in the future, you and your brother could be liable for capital gains tax from the date of the gift.
The local authority now has huge power to claw back assets that have disposed of in the way you propose - you and your brother would be liable for any care costs, or a charge could be put on the property.
If you or your brother ever got in to financial difficulties, your mother could lose her home. Or if either of you got divorced, it would be an asset to be taken into consideration in the divorce settlement.
But would you really want to see your mum go into the local authority care home that has been allocated to her, rather than a private home of her choice, if that day ever comes?
There are all sorts of trusts that can be set up to avoid inheritance taxes, capital gains tax and care home fees so that other tax payers would have to pay for her care, but it is very complicated and you need expert advice.
She can of course give you the house as a gift, but if she continues to live in it she could be said to be deliberately disposing of her assets in years to come. This is called a 'gift with reservation' as she is reserving her right to live in it.
And if the house was sold in the future, you and your brother could be liable for capital gains tax from the date of the gift.
The local authority now has huge power to claw back assets that have disposed of in the way you propose - you and your brother would be liable for any care costs, or a charge could be put on the property.
If you or your brother ever got in to financial difficulties, your mother could lose her home. Or if either of you got divorced, it would be an asset to be taken into consideration in the divorce settlement.
But would you really want to see your mum go into the local authority care home that has been allocated to her, rather than a private home of her choice, if that day ever comes?
There are all sorts of trusts that can be set up to avoid inheritance taxes, capital gains tax and care home fees so that other tax payers would have to pay for her care, but it is very complicated and you need expert advice.
She could take out a loan against her house and give you the money as a deposit on a mortgage. She could trade down to a smaller house/flat and give you the difference. If the total value of her estate is less than �300,000 there would be no problem with Inheritance Tax. Funding Long Term Care for the elderly is a very grey ( no pun intended! ) area and most people are expected to pay most of it themselves. You need specialist advice on that. Every council has a different rule and there are countless court cases being fought at the moment and it will probably end up in Brussels as this government do not seem to care.
http://news.bbc.co.uk/1/hi/programmes/panorama /4777296.stm
Might be worth looking here.
Many years ago my MIL gave my my husband her house with no problems whatsoever......but when we spoke to our solicitor about doing the same for our son....he quite rightly gave the negatives. We took his advise just in case.
It was advise well taken as since then our only child has decided to disown us when we had previousy never had a cross word.......he will now get nothing!!
Proving it doesn't pay to play around with the roof over your head.
DD
Might be worth looking here.
Many years ago my MIL gave my my husband her house with no problems whatsoever......but when we spoke to our solicitor about doing the same for our son....he quite rightly gave the negatives. We took his advise just in case.
It was advise well taken as since then our only child has decided to disown us when we had previousy never had a cross word.......he will now get nothing!!
Proving it doesn't pay to play around with the roof over your head.
DD
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