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Gifting property - deed of gift

People choose to gift property for many reasons: to plan their estate, to see their families benefit during their own lifetime rather than after they have passed away, to reduce inheritance tax. People gift all sorts of assets: money, valuables, their house.

Giving away your home or a share in it is a very big step to take. You won't own your home outright any more. We can help and advise you on the implications of gifting property.

If you would like further information on how we can help you, please call us on 01616 966 229 for a no obligation initial chat with one of our advisors. We have a team of friendly and approachable advisors who are waiting to take your call. They will talk to you about your situation without using legal jargon and they will do their best to make you feel comfortable and at ease. If you don’t want to call us initially you can contact us at a time most convenient to you, anytime of the day or night, through our online enquiry form and we will get back to you as soon as we can to see if we can help.

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    Getting advice

    A property is a huge asset to gift and it is of the upmost importance that it is done correctly, to protect both you and your children. The process can easily go wrong if not administered by a professional. Before making any decisions on your property, you should speak to a qualified legal expert.

    Make sure that any solicitor you appoint has the relevant experience in helping families arrange for their home to be inherited and looked after as they so wish. Getting the right advice on how best to handle your property will mean the right procedures are followed and make sure it is gifted legally and properly, with minimal upheaval for you and your family. 

    If you would like to speak to a member of our Wills and probate law team in relation to gifting property, call us on 01616 966 229, alternatively complete our online enquiry form and a member of the team will contact you to discuss your requirements.

    Areas of specialism

    • Gifting of property not subject to mortgage
    • Preparing agreements about ownership of interests in property

    Gifting property FAQs

    What is a deed of gift?

    A deed of gift is a way to legally add a person or persons to your property deeds, effectively transferring all or part of the property ownership to them. It may also be used to transfer money and/or shares however this is not something we would deal with at Stephensons.

    Any gift made is subject to the 7 year Inheritance Tax rule meaning that if you make an outright gift of your home and you survive the gift by 7 years the property does not form part of your estate for the purpose of paying Inheritance Tax. If, however, you make a gift with reservation of benefit then the 7 year rule will not apply.

    It is worth considering that if the purpose of the deed of gift is to increase financial entitlements for residential and nursing home care fees, the local authority may attempt to recover the assets or assess you as if you still had the assets if they can prove that you deliberately deprived yourself of your assets for this purpose.

    Can I still live in my property once I have gifted it?

    The short answer is yes. However you will need to pay rent to your children if you still want to live in the property. By gifting your property to your children, they effectively become your landlord. As long as you pay rent which is market rate for the property, your home will not count towards your estate when you die.

    Paying rent to your children might seem odd to a parent. However, if you plan on leaving your estate to your children in any event, then this may be best thought of as money they would have eventually received regardless. 

    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. Calculate your potential IHT with our inheritance tax calculator.

    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 five years previously. Certainly there is statutory provision that if the deed is completed less then six 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.

      Further information

      The advice provided to non-face to face clients will be through electronic or written communication only e.g. by telephone and email. Stephensons Solicitors LLP assumes no responsibility for, and shall not be liable for, (a) verification of mental capacity or testamentary capacity (b) verification of any undue influence or duress involved (c) the execution of any documents.
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