Hello and thanks for using Just Answer.
My name is ***** ***** am happy to assist you with your enquiry.
Could you please let me know if your Son and his Wife would be paying off your Mortgage in consideration of you transferring the property or a percentage of it to them?
Is yours and your wife's joint Estate, including the value of the property, likely to be over £650,000?
I look forward to hearing from you.
Thanks for your reply.
First and foremost, there is nothing stopping you from transferring the property to your Son and his wife or transferring a share to them.
However, either way, your Son and Wife would need to obtain the consent from your Building Society, in that their names would have to be added to the Mortgage- there shouldn't be any issue with this, but is something they would need to deal with, before proceeding.
Once the consent has been obtained, it is just a case of you instructing a Solicitor to deal with the legal Transfer, by way of the preparation and signing of a Land Registry Transfer.
Before then, it is a case of deciding whether you transfer the whole of the property to them or whether you retain an interest.
From an Inheritance tax aspect, under present laws (although these may change in the forthcoming budget), you and your wife have a joint tax free Estate of £650,000.Lifetime gifts do not form part of this Estate provided you survive for 7 years from the date of the gift. HOWEVER, if a party makes a gift, but then retains an interest in it, HM Revenue see this as a scam and will treat the party as still owning the gifted property, for Inheritance tax (IHT) purposes. Therefore, if you were to gift either all or part of the property, but remain living there, you would not be saving yourselves anything as far as IHT is concerned.
If you transfer the whole property, you are of course giving up any legal ownership in the property, and if your Son and wife were to get divorced/made bankrupt/die before you, you may find a third party acquires an interest in the property and these are circumstances you can not control.
You may feel,therefore, that it be best for you and your wife to retain some percentage share in the property, meaning you have an automatic right to remain living there!
I hope this assists and sets out the legal position.
Can I assit you any further?
if you were to transfer a percentage of the property, you would still need to apply to your Building Society to add your Son and his wife on the Mortgage, as all legal owner also need to be on the Mortgage. As regards ***** ***** this could be zero or any sum you agree upon with your Son.
For IHT purposes, you can indeed make lifetimes gifts of cash to your Son, and if you were to survive 7 years, this sum would not be classed within your Estate.
As regards ***** ***** as you will remain living there, any transfer to your Son would not be seen as a true gift, whereby the 7 year applies, and you would still be treated as owning the property for IHT purposes.
I hope this clarifies matters.
If I have assisted, I would be grateful if you could rate my answer.
1. Provided you retain some legal ownership,albeit only say a 50% percentage, you retain a right to remain living in the property as a legal owner.
2. You have a tax free allowance of £3,000 per tax year for IHT purposes. Any gifts above this are liable for IHT if you were to die within 7 years. You are free to gift as much as you like in this regard.
3. You are free to either gift the property or a percentage of it, or you can receive a token amount or the full market value from your son- all options are perfectly legal.
4. If you remain living in the property, you would be classed as owning the whole of the property for IHT purposes as it would be classed as "a gift with a reservation".
Hope this clarifies matters.