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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 26215
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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My parents are looking to gift me their house so I can raise

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Hello, my parents are looking to gift me their house so I can raise a mortgage to fund some renovation and extension works. We will all continue to live in the property. Mortgage has been approved and I just need to get the title deeds updated, is there anything else I need to consider? I am aware of potential IHT implications but not sure what else to think about.
Assistant: Where are you located? It matters because laws vary by location.
Customer: In Berkshire in England
Assistant: Has anything been filed or reported?
Customer: No, just the mortgage offer raised
Assistant: Anything else you want the solicitor to know before I connect you?
Customer: No I think that is it!

Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.

May I ask if there is any moretgage or third party interests secured on the property presently please?

Customer: replied 1 year ago.
Hi Joshua, no mortgage or third party interests so they own the title free and clear

Thank you. On that basis the matter is relatively straightforward. From what you say you are aware that the transfer will not change the position regarding IHT because HMRC will treat your parents occupation of the property as a reservation of benefit so treate the house as being within their estate for calculating IHT if they remain in occupation. It is possible to avoid this if they pay you an occupational rent but this is only of relevance if their estate is above the IHT allowances.

Otherwise your parents will need to execute a deed of gift and a transfer deed to transfer the property into your name. In principle there is no reason all of this cannot be done simultaneously with a remortgage but some lenders may insist that the transfer is carried out before they will process an application for a mortgage. Using a broker may allow you to negotiate some more restirctive lender requirements in this respect.

From your parents point of view they are obviously giving away a valuable asset as you could ask them to leave at any point in the future. They should also consider what might happen if anything happened to you in the future - i.e. they may trust that you wouldn't ask them to leave but what if something happened to you? Who would inherit your assets? What if you are/get married, have children etc. They are potentially left unprotected. They will need to think about this carefully. Also do they want anything agreed formally whereby you will obtain a mortgage and apply proceeds to renovations or will they trust you on this point. These are all issues for your parents not you but I mention them for the sale of completeness.

Finally assuming the house is your parents main residence there should not be in capital gains tax issues. There shouldn't be any stamp duty to pay based on what you say unless the amount you are obtainin as a mortgage is more than £125K and you have an obligation to your parents to pay for renovations. If this were the case there may be Stamp duty to pay though only if you had an obligation to renovate.

Does the above answer all your questions? If it does, I should be very grateful if you would kindly take a moment to click a rating for my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though

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