Frequently asked questions
Can I gift my home to my children and carry on living in it?
Yes. It is quite common for an Occupancy Agreement to be drawn up so that your children would agree to you continuing to live in the house as long as you wished.
Can I put the house in joint names?
Yes and it will give you more security if you did as you would continue to be a legal owner of your home.
Will gifting property work to reduce my estate for Inheritance Tax?
If you carry on living in your home after you have put it in someone else's name and you don't effectively pay that person for your use of the home then it is unlikely to work for Inheritance Tax purposes. In the event of your death, you may be treated as still owning the home and therefore it will be subject to Inheritance Tax on your estate. There are ways in which you can gift your home to reduce your estate for Inheritance Tax purposes although this may well involve paying for the continued use. We can advise you on the appropriate options if you are thinking of gifting your home to plan to reduce Inheritance Tax.
Will it work to avoid future care home fees?
Going to live in residential care may arise at some time in the future. The normal rule if you move into residential care is that your house is included as part of your capital and any fees payable would be assessed on that basis, which usually will require the property to be sold and the proceeds to be used towards payment of the fees.
We cannot say that gifting property would be effective in avoiding the sale of the property for the payment of residential care fees, previous client of Stephensons have been told that the Local Authorities disregard any Deed of Gift unless it was completed more than 5 years previously. Certainly there is statutory provision that if the deed is completed less then 6 months before the donor of the property goes into residential care a charge can be registered against the property so any fees can be recovered when the property is eventually sold. The most important point for the Local Authority in deciding whether or not the property remains part of your capital for assessment of your contribution to residential care fees is the intention behind the gift at the time it was made.
Will I have to pay Capital Gains Tax?
If you own your home outright and it is your only home then there will be no Capital Gains Tax to pay as a result of your gift. If it is a second home though Capital Gains Tax may be payable.
Are there any risks for me with gifting property?
There are risks. The person(s) receiving it could get divorced, be declared bankrupt or die. If so, your home would actually be their assets. You wouldn't be able to control what happened to their property even though you may be living in it. There could be risks for the person receiving the property. Putting your house in someone else's name could limit their entitlement to means-tested benefits. It could mean that they have to pay Capital Gains Tax in the future if they ever sold the house and were not actually living in it because they had a home of their own. Always seek legal advice before deciding whether gifting your home is right for you. While such a big decision will always be yours to make, we can give you the all advice you need to help you.
