Question re stamp duty when transferring property

[Sunshine6195102]

I wondered if anyone could help me…if a parent buys a home but then a few months into owning it they decide to transfer ownership to their two children (both of whom own another home) although they will continue to live in it for their lifetime, will they need to pay stamp duty a second time for the full second home amount on top of the original lower amount the parent paid (because it is their only home)? Or would the stamp duty amount owned on transfer be the difference on top of what the parent paid? I hope that makes sense. Thanks

Well, this sounds like a plan without any flaws…

Stamp duty is only payable if consideration is paid - so if they are making a gift no SDLT unless a mortgage is involved. IHT may be an issue though if they continue to benefit from the asset given away. Also CGT if it has gone up in value and is not a main residence

FYI unless the parents pay market rent under Inheritance Tax Rules this is a gift with reservation and the full value of the house counts towards IHT thresholds.

I would also research CGT anc deprivation of assets.

I would advise your parents to seek legal advice as a better option maybe to sever joint tenancy and to write wills leaving their 50% to DC with a life interest for their spouse.

Why would they do that?

IHT will still be payable under the gift with reservation of benefit rules.

CGT will be payable when the children dispose of it because private residence relief would not apply.

And if either of the children get divorced, their house, that you live in, will be a part of that divorce and someone will have to buy them out.

Or if one of your children dies, their spouse will inherit their share of the house. Maybe they will force a sale, maybe they will remarry, have children and leave the house you live in to their new spouse or children.

Perhaps you will need care as you get older and you will have no say in where you go. Then when you die it will be a quite obvious deprivation of assets and your children will end up paying for your care anyway.