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0 Rather than wait until they die, many people choose to give their property to their children while they are still alive. However, there are a number of tax implications it’s important to be aware of.
Gifting your Property
One of the main reasons why people decide to give their property to their children is to reduce the amount of inheritance tax they will have to pay when they die. With inheritance tax in the UK starting at 40% and applicable to anything over Ł325,000, it could save thousands. But there can be a number of financial consequences which need to be considered, including the fact that they may have to pay Stamp Duty.
Seek Advice
A specialist transfer of equity solicitor will be able to guide you through the process of a Transfer by Way of Gift, or Deed of Gift, which are the names given to handing over your entire property to a loved one. The main rule is that you must remain alive for seven years after doing this, or inheritance tax will need to be paid.
Independent legal advice on the specific rules, and on ways around them, is available from experts such as www.parachutelaw.co.uk/transfer-of-equity-solicitor. This includes something known as a Gift with a Reservation of Benefit (GROB), which is where you stay living in your property and means that the value of it won’t come out of your estate unless you paid market rent.
Avoid Risks
If you intend to transfer your property to your children in order to avoid care home fees by minimising your assets, there are also consequences and again, advice should be sought. It may be that your local authority considers that you deliberately got rid of assets and still take the value of your home into account.
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