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Helen Hill
Helen Hill, Lawyer
Category: Law
Satisfied Customers: 497
Experience:  LLB Law, Licensed Conveyancer and Probate Practitioner, Fellow of CILEx, Trust and Estates Practitioner (STEP)
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I want to gift a property 5 bedroom house to a family

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Hi, I want to gift a property 5 bedroom house to a family member, there is no mortgage, what is the best way to do this?

Thank you for your question. I am a licensed conveyancer so I will be able to assist.

If you wish to gift a property to another individual you can do this via a Deed of Gift and register the transfer on the Land Registry using a TR1 form. You just need to be careful of any tax or other consequences as a result of the transfer. So that I can give you advice on this could you elaborate on the circumstances?

Customer: replied 6 months ago.
Thank you for your rapid response. The property is for my Sister who has MS and my Mother who cares for her and my nephew and niece. It is to be a gift and inheritance for them. Is that correct that as long as I don’t pass away within 7 years no inheritance tax is payable? Or what would be the most efficient way of doing this?

You are correct; a gift to another individual is classed as a 'potentially exempt transfer' which means that, if you survive for seven years after the date of the gift, the value is no longer part of your own taxable estate on your death. Do you own the property already or is it a new purchase you are making? For capital gains purposes, if you own it already, the transfer would be a disposal and may trigger a charge.

I am sorry to hear your sister is unwell. It might be worth considering placing the property into a trust instead of making an outright gift. This would mean that it not strictly 'owned' by any of them so would not affect any entitlement to benefits they might receive now or in the future. It would also mean it could be passed on to future generations through the trust without ever being part of one individual's estate for inheritance tax purposes.

Customer: replied 6 months ago.
I do own it already, however the value hasn’t increased that much so capital gains would be hopefully be small.
Your trust suggestion is interesting, how would you set this up?

It would be an arrangement where you would appoint trustees, which could include yourself, to manage the fund moving forwards. The property would be transferred to the joint names of the trustees (there must be more than one) with a restriction on the property title confirming it is held in trust.

Your mum, sister and her children can all be named as potential beneficiaries of the trust but the trust could be fully discretionary so the trustees would have control over the fund. Your sister could then be allowed to occupy the property with her family as a beneficiary of the trust (this would ensure that the principal residence exemption for CGT would be available moving forwards.

The only potential issue is that the transfer into trust would be a chargeable transfer rather than a PET. This would mean that you could only transfer up to £325,000 into trust without any lifetime charges to IHT becoming applicable. Again, after seven years, the property would be outside of your own estate for IHT purposes.

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