It has become increasingly common for people to arrange gifts of property for a number of reasons. It is not always straightforward and you should get good legal advice from a qualified professional if you are considering this.
Things to look out for
If you’re considering gifting property, there’s a number of things you need to bear in mind. One of the most common reasons for doing it is to prevent the inheritance tax liability that may arise when a property is inherited. The current threshold for inheritance tax is £325,000, so a married couple have a £650,000 threshold when they combine their allowances. You should consider whether the estate will exceed this threshold before you take further steps. Any property gifted seven years before death will be exempt from inheritance tax.
Gifting to married children
If you are considering giving your property to your children and they are married, there is a risk that if they divorce the spouse of the beneficiary could be entitled to half of the property that has been gifted.
A permanent arrangement
Once you’ve made arrangements to gift a property it cannot be reversed unless there are certain circumstances. Once you have made the gift you are no longer the legal owner and unless you have put in a specific caveat into the documentation, there is no possibility of you reversing the arrangement.
Financial stability of the beneficiary
You should have a serious discussion with the intended beneficiary of the property you wish to gift as there is a risk that if the beneficiary becomes bankrupt, the property will be at risk. This is especially important if you are considering remaining living at the property after the gift has been arranged as you could potentially be made homeless.
Deed of gift
You can transfer your property as a gift without any money changing hands. This is known as a deed of gift or a transfer of gift. There are a number of things to bear in mind. You can read in more detail about the things you need to consider here: https://www.pettyson.co.uk/about-us/our-blog/530-gifting-property-transfer-home-ownership-deed-of-gift Things to consider are:
The owner should be of sound mind
Legal advice should be taken before arranging the deed
The property should have no debts secured against it
The Land Registry should show the owner as being listed as the legal owner
If you would like legal advice on giving property away, read more here and make arrangements to get advice: Sam Conveyancing
As there are so many things to consider when you give away a property, you should take legal advice and make sure you and any beneficiary of the gift understand the implications and any associated risks and benefits.