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My brother wants to buy me a house, I pay the mortgage on it,

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My brother wants to buy me a house, I pay the mortgage on it, then he will gift it to me. How do we transact the gifting if a house and what, if any, are the tax implications and legal fees?
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The UK has no Gifts Tax regime so gifts are outside the scope of UK taxation. Thank your lucky stars you do not live in France where Gifts Tax kicks in at 5K Euros! The conveyance of the house will have to be undertaken by an appropriate person, usually a solicitor. I suggest that there will be little change out of a thousand quid for this transfer. If it is Land Registered then the transfer can be simply done by means of a Land Registry transfer which would cost under a hundred, but you have to absolutely certain of the title before this is done which is why the use of a solicitor to verify such matters is recommended. On gift there are Inheritance Tax (IHT) matters for the donor to consider. A gift creates a Potentially Exempt Transfer (PET) in the donor's IHT affairs. PETs run off at a taper over seven years and in the event of a decease before this time limit then the PET is added back to the donor's estate for IHT purposes. PETs are the first to suffer the tax and if the estate is insufficient to meet the tax on the PET it cascades down to the beneficiary for immediate payment. The classic defence against a PET is, of course, a decreasing term life insurance policy. If your brother continues to live in the house after gifting then this constitutes a Gift with Reservation and the seven year time rule does not begin to run until his vacation. Mortgages are irrelevant to this question save that they will have to be cleared at the time of transfer or some appropriate change over negotiated. I do hope that you find my reply of assistance.
Customer: replied 10 months ago.
That's great, thank you for your help Keith. he's only 39 so plenty of time to pay off mortgage and gift. Have a good evening.
Expert:  bigduckontax replied 10 months ago.
Delighted to have been of assistance.
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