if i give my home to children who live in it will they be liable to cgt

[user1499268089]

My children who are adults still reside in family home.

I live in rented property,

I'm wanting to sign property over to them, I only own one property if they decide to sell it say in 10 yrs will they be liable to capital gains tax.

I believe they would pay cgt if they sold it and didn't live there but they do live there

the value of property is £150,000, I just don't want anything more to do with property,

this is just a thought I know I will need to seek legal advice.

You might become liable to CGT when you gift a property that you don't live in. Giving away the property counts as a disposal of an asset, and the tax would be calculated on the market price, so you would be expected to pay CGT on gains above the threshold even if you don't receive any money. It would depend on how long you lived there as well.

If the children live in the property then they wouldn't pay any CGT provided they lived there from the time they were given it until the time they sold it. However there might be other implications for them, e.g. they would count as homeowners so it might rule them out for first time buyer schemes, and higher stamp duty.

Do you own it outright or is there a mortgage on it? CAN might not be due in the whole amount if it has been a family home for the whole time that you've owned it. Has it been a buy to let?
How many dc live there? As I understand it there is an allowance of around £11k on CGT so do they already pay it on something.

My personal view is that if they given an asset for free on which they gain capital then they should just pay any tax that is owed. It should rule them out of first time buyer schemes imho.

Not sure how old you are but if you may need care and/or benefits in future it could be seen as deprivation of assets. You might have to pay cgt on the transfer if it hasn't been your residence for a while.

Can I ask why you're doing this? You're paying rent each month and they're not. The house isn't expensive enough for them to split the value and each buy a place outright, so at some point in their lives they'll need to split it and put it as a deposit. If they then live with another person, that deposit could be halved if the relationship ends.

Why not just sell it and give them a chunk each for a deposit on their own places?

How old are you op?

Do they want to stay in it indefinitely? My husbands brother and sister are still in the family home, with their Dad renting. They've no intention of going anywhere.

Even with huge deposits, they'd struggle to buy elsewhere as they both have poorly paid jobs. I can see them living there together forever. Is this what you're expecting to happen?

hi no mortgage will be on it soon.

I'm in 50s so hopefully wont need care any time soon,

they love the home but for me its bad memories for personal reasons, I had to move away and feel guilty as I now rent away, but am happy.

I feel what they went through they deserve to be able to stay there,

if I was to sell it they would struggle to by elseware.

I believe I'm exempt from cgt if selling as only own one home , but is it didn't if I just sign over,

I know I need to seek legal advice, but I have no interest in the property, they on low paid jobs, which they would have to pay bills etc, just live rent free.

I believe if either decide to buy a property they would have to pay extra 3% stamp duty but cant see them doing that anytime soon

forget to say children are adults aged 22/25

I moved to rented about 4 yr ago,

have lived in house 20yrs prior

CGT exemption is based on a principle private residence - if you are living elsewhere then the house you own is not your residence, regardless of whether you own or rent the place you live in now.

I was under impression it can still be classed as residence provided it hasn't been let.

I know if you own 2 homes you have to elect one, but thought I read somewhere its okay if other is rented.

kust nice to have a idea before I seek legal advice

The most you will pay tax on is 2/24 of the profit.

The time when you lived in it is covered by PPR relief, as are the last two years of ownership.
You have an exemption of £11,300 for this tax year (2017/18) so will only pay tax on any gain above this amount.
The tax will be at 10 or 20% depending on whether you are a basic or higher rate taxpayer, based on current rates.

Your children should not have a chargeable gain as long as it is their only or main residence. If for some reason they do need to calculate the gain, their base cost will be the value of the house when you gift it to them.

Hope that helps - but make sure you still get advice as there might be other issues that you haven't mentioned.

I'm a low tax payer, so would I have to pay the tax myself prior to gifting it to them.

I will have to look for a decent solicitor.

friends told me why don't you just add them to the deeds on house with yourself, as when time comes my estate will be under the IHT threshold

The tax, if any is due, will be payable on 31st January 2019 if you gift before 5 April 2018.

Even if the whole of the £150,000 was profit the gain would only £12,500. (2/24 x 150000) After the exemption the tax at 10% would only be £120. (£12,500 - 11,300 = £1200 @ 105 = £120).

Hope that makes sense

thanks Dalek, is the gain purchase price originally paid and time of gift, do you take into account extensions improvements on the house.

with above figures its very nominal, just curious so I understand it better.

I actually thought that I read somewhere that you can own one property and even if live elsware in rented and providing that housed owned been a main residence, you wouldn't pay cgt on property if selling maybe different gifting it

You can own two properties and elect for one as your PPR.

It's quite unusual to own a property, not rent it out and live elsewhere - you may be able to argue that you only have one PPR - but to be honest with the sums concerned it's not worth getting in to a fight with the revenue. I will have a think and do some research and come back if I find anything.

If you made improvements to the property and it is reflected in the vale of the property when you sell it - e.g an extension or upgrading a small kitchen to a big state of the art one - then you can add the cost to the original purchase price in calculating your gain - thereby reducing it. If it is maintenance - new windows, painting and decorating etc then you cannot.

Good luck

hi dalek

I didn't rent property out as children still resided in it

I had to move away from area, there father had a serious mental breakdown, which involved him being sectioned, He was seriously ill.

Hes better now and still gets treatment but still finds it difficult to return to area. the move away was only meant to be short term, but he gets much better help in the area we now live in

from my understanding now there will be no cgt tax to pay anyway.

If I just use the years I resided there as PPR

I bought house for 52,000 now value now, I imagine be 150,000 as needs a new garage roof, how does the hmrc calculate current value.

other properties list for around £170k but what they sell for is another matter.

Also from what ive read, if I decide to do this I'm better doing it sooner than later as will have actual less yrs then,

The flip side is children then named on deeds will no longer be first time buyers and if for some reason they claim benefits could effect that.