Gifting property might seem like a sensible and generous thing to do, but it doesn’t come without complications.
Can I gift property to my family?
Gifting property as a gesture to your family members is, of course, allowed, but there are risks to be aware of. The act is called a Deed of Gift.
What tax do I/they pay?
When you gift a property, tax will apply depending on certain conditions and details. It is wise to get a financial advisor to offer you guidance on your specific circumstances. Inheritance tax might also be due should you pass away within seven years of the act, which is another consideration for all involved and should be thoroughly investigated prior to any agreements being made.
Further income tax implications may arise if the property becomes a source of income for the person it was gifted to, such as if it was to be privately rented. Finally, capital gains tax may apply if the property is eventually sold by the person who received it, which would be based upon the increase in value of the property from when it was gifted to the time of the sale.
Professional advice is invaluable to help you navigate the complications of gifting property. Furthermore, having a Lasting Power of Attorney may impact how decisions are made. To enquire about creating an LPA online and what it entails, visit a provider like Power Of Attorney Online.
The impact on eligibility for benefits
If a person gifts a property, it may still impact the eligibility to receive certain benefits, like assistance with care home fees. In the eyes of the government, the person would have had an asset, deliberately given away to avoid paying the full value of care fees.
Other considerations
There are many other legalities to think about when considering gifting a property, such as how easy it will be to transfer a mortgage, if applicable. Add to that the possibility of family disputes erupting. If you’re planning a Deed of Gift, then seek professional advice and cover every possibility.