Mum wants to give me a house – Legal/tax implications?

Skunkworks

Skunkworks

Skunkworks

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Joined
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My mum wants to sign ownership of her house over to me to try and avoid inheritance tax. She isn’t dieing, or even in bad health, she’s just thinking ahead.

In addition to my own research I thought I’d ask here too, as there seems to be an expert in every field here. :)
 
I looked into this before and I'm sorry to say I can't remember any of it.

But I think it needs to be years ahead of any illness etc. My advice is to see a sollictor asap - they know more ways around things than the law makers themselves.
 
As soon as she's signed it over kick her to the curb and enjoy owning a lovely house all to yourself.
 
I think I read somewhere that if she does that then you'll have to pay tax on it because it's a gift, capital gains tax?

Couldn't you buy the house from her for £1 or something?

Have a word with citizens advice, see what they say.
 
jdickerson said:
I looked into this before and I'm sorry to say I can't remember any of it.

But I think it needs to be years ahead of any illness etc. My advice is to see a sollictor asap - they know more ways around things than the law makers themselves.
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She is only in her mid-fifties, so hopefully is well ahead of time. We do intend to so a solicitor, but I'm hoping to get the jist of how it works before any meetings, so I have a better idea of what is being said.
Darg said:
As soon as she's signed it over kick her to the curb and enjoy owning a lovely house all to yourself.
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*scratches chin
 
Read this

http://news.bbc.co.uk/1/hi/business/3669347.stm

The "inheritance gift with reservation" rules operate so that if you simply give away an asset, but continue to have the benefit of using it, the gift is simply ineffective for IHT purposes.
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As a consequence of the gift, even if it had worked for IHT, your parents no longer owned their own home for the purposes of CGT.

You will be aware that your parents would normally be exempt from CGT on the disposal of their own home.

However, because they have given the house away the actual owners (you and your sister) do not qualify for that exemption because you do not live in this home and therefore it does not qualify for the "Principal Private Residence Exemption" (PPR).
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Captain Kirk said:
This may help... Inheritance tax
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Very helpful. Thank you.
PsiFox said:
Read this

http://news.bbc.co.uk/1/hi/business/3669347.stm
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If I am reading it correctly, there are implications giving the house to someone who doesn't actually live there. Whilst I haven't lived there for years now, it is still the address on all of my bills etc, so hopefully I can avoid the CGT.

Thanks. This is just the sort of thing I need to prepare for a meeting with a solicitor.
 
Isn't it illegal in some way to sell someone a house for a token amount? I think it has to be sold for a sensible amount, otherwise it messes up the housing economy or something like that. I don't really have a clue, just something I heard from someone a little more knowledgable.
 
Psyk said:
Isn't it illegal in some way to sell someone a house for a token amount? I think it has to be sold for a sensible amount, otherwise it messes up the housing economy or something like that. I don't really have a clue, just something I heard from someone a little more knowledgable.
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I think its dodgy in some way as when you come to sell the house you would be liable for CGT on basically the full value of the house.

Thats what i think anyway.
 
I'd get professional advice on this - as has already been quoted, what you're planning is most probably completely ineffectual for IHT and can actually make things worse in terms of CGT.

If your mother carries on living in the house, then the government view this as never really gifting you it (Gift with Reservation), so it's counted for IHT. The only way of avoiding it being seen as a GWR is for your mother to pay a market rent to you for living there.

The BBC link PsiFox posted shows how your idea plays out.
 
LOL, all opinions and second guesses here.

She can sign the house to you, but you will subject to Capital Gains Tax. You can get around it but PET, where if she subsequently live for 7 years you should be clear. That's the short version anyway, cba getting my books for the longer one.
 
Wait, people have to pay tax for handing over homes on death? That's just ridiculous! Stupid greedy country gone to the dogs :mad:
 
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