The Ramsdens Conveyancing team often get approached by clients that are wanting to gift property to their children or other relatives. It is important to understand the effects of gifting property, especially if the property is your main residence. Karen James, Head of Conveyancing, has set out some points to consider before giving property away.
- Once the property has been gifted then the recipient can deal with the property in any way that they wish. If the recipient dies then the property will pass under their Will or through the intestacy rules if a Will does not exist.
- Unforeseen costs may arise in the future and you will not be able to sell your property to raise the required money.
- Your relationship with the recipient may change and they may not hold up their side of any agreement that may have been made in respect of the gift.
- The property may become subject to a matrimonial dispute between the recipient and their spouse.
- You risk losing your home if the recipient becomes bankrupt and the property becomes subject to bankruptcy proceedings.
- If you give away your home and continue to live in the house then the gift will not usually be effective in avoiding the payment of Inheritance Tax. When you die the value of the house would be added back on to your estate to calculate whether or not any such tax is payable. There should not be any inheritance tax implications if your total estate including your house does not exceed the current threshold of £325,000.
- If you subsequently require private or Local Authority residential accommodation then the gifted property may be excluded from the assessment. However, the value of the gifted property can be taken into account if the Local Authority finds that deliberate deprivation of the asset has taken place. There are no time limits on the Local Authority’s power to pursue for such costs, however, the longer period between the gift and assessment then the less likely the Local Authority will be successful. The law surrounding care home funding is complex and specialist advice should be sought before giving away property.
- If residential care is required then the Local Authority may only pay for a basic level of care.
- The recipient may attempt to move you into residential care prematurely in order to occupy or sell the house.
- The recipient may be required to pay Capital Gains Tax and advice should be sought from a tax specialist.
Contact us
If you are looking at gifting property and want expert advice before you proceed, then please speak to our property team by calling 0808 1685 643, fill out an online enquiry form, or email getmoving@ramsdens.co.uk and we will be in touch.