House sale----parents to kids
Discussion
IIRC, the house cannot be sold for a token amount - HMRC take a dim view
Also, there's a potential (although unlikely) IHT issue - if you sell (or give) your house to your children and they die before you, you could inherit the house back and you could end up paying IHT on some of the proceeds
If you want to get your property into your children's name, the easiest way is to gift it to them (I'm assuming that its you and a partner, which means there will be no IHT to pay unless your house is worth over £650,000). If you die within 7 years, your kids will have an IHT bill, so you can take out a 7-year life assurance plan (called Gift Intervivos) to protect them.
Ultimately, the best thing you can do is take advice from a suitably qualified financial adviser - it may cost you a few hundred quid, but it could save you (or your kids) hundreds of thousands
Also, there's a potential (although unlikely) IHT issue - if you sell (or give) your house to your children and they die before you, you could inherit the house back and you could end up paying IHT on some of the proceeds
If you want to get your property into your children's name, the easiest way is to gift it to them (I'm assuming that its you and a partner, which means there will be no IHT to pay unless your house is worth over £650,000). If you die within 7 years, your kids will have an IHT bill, so you can take out a 7-year life assurance plan (called Gift Intervivos) to protect them.
Ultimately, the best thing you can do is take advice from a suitably qualified financial adviser - it may cost you a few hundred quid, but it could save you (or your kids) hundreds of thousands
magpie215 said:
Any pitfalls to this scenario?
can the house be sold for a token amount?
Basically any issues with doing something like this?
Any advice gratefully received on how this can be done legally with the minimum of tax grab.
TIA
Yes the Inland Revenue will be on it like flies on poo.can the house be sold for a token amount?
Basically any issues with doing something like this?
Any advice gratefully received on how this can be done legally with the minimum of tax grab.
TIA
If it's your main home capital gains tax is not a problem. If it's a buy to let/second home then you'll have to pay CGT on its market value I think, even if you give it away or sell it for a nominal sum.
Inheritance tax if you don't live for 7 years. I would assume that selling it for a token sum rather than giving it away would not get round this. Also HMRC aren't too keen on people whi "give" their homes to their kids, then live in them rent free for many years.
More here http://www.hmrc.gov.uk/inheritancetax/pass-money-p...
Inheritance tax if you don't live for 7 years. I would assume that selling it for a token sum rather than giving it away would not get round this. Also HMRC aren't too keen on people whi "give" their homes to their kids, then live in them rent free for many years.
More here http://www.hmrc.gov.uk/inheritancetax/pass-money-p...
Edited by Aretnap on Wednesday 13th February 23:36
This is probably illegal, but what about selling it to a thrid party - a trusted friend perhaps someone who lives abroad.
Pass it on a couple of times to trusted friends with provision made in their wills that it goes to the kids if anything unexpected happens.
Do this over 10 years, then "sell" to the kids.
There is probably a massive flaw in this. I don't know, would it work?
Pass it on a couple of times to trusted friends with provision made in their wills that it goes to the kids if anything unexpected happens.
Do this over 10 years, then "sell" to the kids.
There is probably a massive flaw in this. I don't know, would it work?
Edited by wildcat45 on Thursday 14th February 08:07
wildcat45 said:
This is probably illegal, but what about selling it to a thrid party - a trusted friend perhaps someone who lives abroad.
Pass it on a couple of times to trusted friends with provision made in their wills that it goes to the kids if anything unexpected happens.
Do this over 10 years, then "sell" to the kids.
There is probably a massive flaw in this. I don't know, whould it work?
It would cost a fortune with stamp duty for starters....Pass it on a couple of times to trusted friends with provision made in their wills that it goes to the kids if anything unexpected happens.
Do this over 10 years, then "sell" to the kids.
There is probably a massive flaw in this. I don't know, whould it work?
If you put it into a trust for your children, you will have to pay rent at market value to live in it, not to mention if you pop your clogs before 7 years, your children will have to pay tax on it, i might be wrong at that point though but pretty certain thats the case. You might want to see if you can gift it to them. And if you planning on doing any work to the house your wanting to gift make sure you get the value before you do any work on it rather then when youve just finished the work.
Zulu 10 said:
The Trust which my parents and I have set up does not require any rent to be paid, but YMMV.
The seven years to which you refer is for IHT, and is a sliding scale from years three to seven, so still worth doing even if the parents don't live the full seven years.
Gifting does not protect the asset from the grasping hands of the Local Authority.
Would it be possible for you to tell me how you've set this up, as im currently having problems with with this myself. ThanksThe seven years to which you refer is for IHT, and is a sliding scale from years three to seven, so still worth doing even if the parents don't live the full seven years.
Gifting does not protect the asset from the grasping hands of the Local Authority.
Gassing Station | Finance | Top of Page | What's New | My Stuff