Gifting houses

[TFU] Thegoon84 · 20 Jan 2017 at 11:35

My dad and I have done a house swap and I've put an extension on his (my new one) as it was a corner plot? (he has no mortgage) I do, on the old address. We're about to sort all the deeds out.

Can my dad gift this house to me meaning I'd own both homes without having to pay any fee's?

Further more would if he ever wanted it back or he wanted to sell, could it be gifted back to him?

dowie · 20 Jan 2017 at 11:41

Eh? If he's gifted it to you then why would he sell it and if he wants to have the option to sell it in future then why gift it to you?

Main issue is inheritance tax, which isn't much of an issue if he lives for a few years after gifting it.

You might want to seek some advice on this and in particular try to figure out what you're actually trying to achieve out of this as the initial thoughts seem a bit confused/conflicted.

[TFU] Thegoon84 · 20 Jan 2017 at 11:46

dowie said:
Eh? If he's gifted it to you then why would he sell it and if he wants to have the option to sell it in future then why gift it to you?

Main issue is inheritance tax, which isn't much of an issue if he lives for a few years after gifting it.

You might want to seek some advice on this and in particular try to figure out what you're actually trying to achieve out of this as the initial thoughts seem a bit confused/conflicted.

Yeah we're going to see a solicitor soon.

Basically I want to avoid all the exchanges of contract and stamp duty.(LEGALLY).... I need to take out a new mortgage in November so want to take it out on the new house as I'd have about 60% equity because of the new size of house.

Just want to know what I need to watch for if my dad simply gifts me the house I've just put the extension on while still owning my previous.

George Hincapie · 20 Jan 2017 at 12:20

[TFU] Thegoon84;30421678 said:
Basically I want to avoid all the exchanges of contract and stamp duty.

I suspect there are barriers in place to prevent precisely this. The Government never miss an opportunity to shake you upside down for your loose change.

Dave M · 20 Jan 2017 at 12:29

you can't avoid stamp duty and if you own both homes at the end of 'swap day' you'll be hit particularly hard.

Pipe & Slippers · 20 Jan 2017 at 12:34

You'll need to get a valuation for Stamp Duty purposes so that'll be fees you can't avoid

I'm not clear on what you mean by gifting...if you want legal title to the house you'll have to get the property conveyed...I think you have to be a Licensed Conveyancer or Solicitor to do that

Martynt74 · 20 Jan 2017 at 12:37

I believe gifting would only cover any Capital Gains (which would be rolled over to you when you sell) and obviously would eliminate any IHT as long as your dad survives 7 years from the date of the gift.

Depending on his situation it may be worth leaving it in his name even if you live in it, as with new IHT rules his main residence is exempt from IHT anyway.

Efour · 20 Jan 2017 at 13:17

I'm sure you will have a few grand squeezed out of you by some bs legality of signing a change of ownership form or something...

Azza · 20 Jan 2017 at 13:56

I believe you wouldn't pay SDLT as there is no mortgage on the property.

You could if you wanted to gift back one of the properties in the future the same way provided there is no mortgage on it. I'm not sure how it would work if he wanted to sell a property after that, might get hit with a huge CGT bill.

If you wanted to buy another property (that isn't your main residence) in the future you'd be hit with a higher rate of SDLT as well due to having multiple houses.

Basher · 20 Jan 2017 at 14:01

Azza said:
I believe you wouldn't pay SDLT as there is no mortgage on the property.

Why wouldn't you pay Stamp Duty just because you don't have a mortgage? Stamp duty is a tax on buying a house, not how you're buying it.

ardy89 · 20 Jan 2017 at 14:12

https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property#gift

Basher · 20 Jan 2017 at 14:13

ardy89 said:
https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property#gift

Interesting, wasn't aware of that at all.

ardy89 · 20 Jan 2017 at 14:26

You would have to pay stamp duty on any remaining mortgage. If the property is mortgage free then there is no stamp duty to pay.

[TFU] Thegoon84 · 20 Jan 2017 at 14:41

ardy89 said:
You would have to pay stamp duty on any remaining mortgage. If the property is mortgage free then there is no stamp duty to pay.

Ah great. I'l break it down (fake names:

I Own: 3 short Road - (Mortgaged to me)
My Dad owns: 6 long Road - (No Mortgage)

My dad will gift me 6 Long road and i'l continue to own 3 short road (where he now lives now rent free ofc)

My intention is to change the mortgage to 6 Long road in November as its now worth £60,000 more than short road.... aka cheaper interest rates.

And thanks for the replies guys!

[TFU] Thegoon84 · 20 Jan 2017 at 14:48

Next question then.....

Dad has gifted me the house which he had no mortgage on. I continue to pay my mortgage on other house.... If I decided to mortgage against the gifted house, would I then pay stamp duty?

a1ex2001 · 20 Jan 2017 at 14:55

[TFU] Thegoon84;30422302 said:
Next question then.....

Dad has gifted me the house which he had no mortgage on. I continue to pay my mortgage on other house.... If I decided to mortgage against the gifted house, would I then pay stamp duty?

Please talk to a professional you are opening a whole can of worms here not just with regards to stamp duty but inheritance and capital gains tax also. You need to be fully aware of the implications of what ever you do before you sign anything up and you won't get the full picture here.

Psycho Sonny · 20 Jan 2017 at 15:16

[TFU] Thegoon84;30422279 said:
Ah great. I'l break it down (fake names:

I Own: 3 short Road - (Mortgaged to me)
My Dad owns: 6 long Road - (No Mortgage)

My dad will gift me 6 Long road and i'l continue to own 3 short road (where he now lives now rent free ofc)

My intention is to change the mortgage to 6 Long road in November as its now worth £60,000 more than short road.... aka cheaper interest rates.

And thanks for the replies guys!

Looks like a lot of hassle.

Gift your dad your house if it is under Inheritance tax rates.

He sells you his house for whatever is outstanding on your current mortgage on the same day so your mortgage is ported over.

However you will need to pay SDLT this way.

So you would need to calculate all the different fees of the various ways of doing it and see what is best.

He could just gift you the home and you just keep paying the mortgage on your old home. What you save in mortgage interest it's likely you will pay more in fees and taxes. Plus do you really care about saving a few quid per month when your being gifted a home likely worth a thousand times more than what you will save in interest in messing about.

Seems like more hassle than it's worth tbh. When he eventually dies I take it you plan on selling or renting out your old home or do you want to sell both and upgrade? You pay a lot more taxes on second homes. It's best to own 1 at a time unless your hoping to profit out them through rent.

HangTime · 20 Jan 2017 at 15:39

It's apparent to me from this and previous threads that you really need some professional advice on the way forward.

As I see based on 90s thinking time as a non-professional this is the way forward but could be absolute cobblers:

-Dad gifts you the house
-You mortgage the new house for enough to pay off your existing mortgage (assuming no ERC) plus the extension work you need doing
-You pay off your existing mortgage
-You gift your old house to your dad
-You do the extension work on the new house.