Property ownership

[Regretsandregrets]

I am divorced and working full time at the moment.My daughter lives with me.I am the sole owner of my house.I am thinking of adding my daughter as a tenant in common with a 50% share of my house.
Are there any tax implications? Will it count as a gift from the date of tenancy?
If I need to go in care in future how will this change affect the costs.I am active and in good health overall just trying to give some financial stability to my daughter.
My daughter is 29,working full time and is the executor and sole beneficiary named in my will.Any guidance will be appreciated

What happens if your daughter marries or civil partnership & still lives we you or wants to move out ?

From my understand this will remove her ability to utilise her current first time buyer stamp duty exemption as she owns a share in your house. Therefore if she was to buy a home herself she'd have to pay stamp duty in full, instead of being able to make the most of the current scheme.

It depends why you think this would be of any benefit?

Why do you want to do this?

I want to do the same for my DC, can't help them in any other way financialy so watching with interest.

Her getting married should not be an issue.It will just be an asset in her name that can give her more options while making financial choices.
The main reason is to reduce the size of my estate and reduce the amount of inheritance tax she might have to pay in the event of my death or avoid it altogethet.
If it counts as a gift I would like to do it as early as possible as it takes 7 years to achieve full exemption from inheritance tax.

It will just be an asset in her name that can give her more options while making financial choices.

Until she gets divorced then it goes into the settlement pot. Deprivation of assets for care needs may also factor.

Very relevant points.It will not be her matrimonial home and may not be a part of her matrimonial assets.I am not entirely clear about it.
Again, not sure about deprivation of assets.I am 61years old, fully active and independent with minimal health issues.Any financial planning now surely would not count as deprivation of assets.
Would like to learn more about these issues before I act on my idea.
Thanks, all for your input.

It might be her marital home, though. If she owns 50% of it she'd be totally within her rights to move a partner in.

@MrBobLobLaw...
Thanks for pointing that out.
If she buys a house for less than £250k she should still be able to avoid stamp duty?

@Peony99.
True..
I take your point and dont have a problem with it.I was only considering her setting up a seperate home with her partner and in that case her 50% share in our joint property should not be a part of her matrimonial assets.Only my understanding, could be totally wrong.

It will be a matrimonial asset. You can't avoid that. So potentially if she divorces you could find a judge order her and you to sell in order to pay the ex off.

There's a reason people don't just give away half their house to avoid inheritance tax you know....

Why don't you downsize and give her some cash instead?

If your daughter owns part of your property

She would be liable for stamp duty on any other property

@titchy..
Thanks for your contribution.Downsizing is certainly one of the options which I might consider in a couple of years when i retire.At the moment I dont want to move to a smaller place.Morever, if I die the property will not go through a probate process if held in both our names.Just trying to keep things simple and manageable for her in my absence as I can see her struggling with such issues.
I am well aware that it is not going to cover all eventualities.

@BlueSnuggly62894Rug..
Ok..That, on its own, will not be enough reason for me not to consider it..!
But,yes, i take your point.

MIL considered putting her house in DH and BIL's names. Solicitor strongly advised against it. As PP said, in divorce it would be a marital asset: if she died before you, her spouse would also end up with half your house and could force you to sell. If she bought her own property she'd have to pay 3% stamp duty no matter the cost of the property as it would be a second home. If she moved out you'd have to pay her a decent amount of rent for HMRC not to think you were trying to game the system. And while HMRC is time-limited in how far it can go back, councils aren't - yes, you may not need care for another 30 years but the council could still decide that handing over half your house was deprivation of assets and order the sale or put a charge on it.

What if you fell out with her and she wanted to sell the house?

As the solicitor said, if it were that easy everyone would be doing it.

@ginandtonicformeplease..
Lots there to focus one's mind..
Why would I be required to pay her ANY rent if I have 50% share of the property?
That would certainly make me think twice about it!!
So, if I downsize and hand over cash to her is that not deprivation of assets?
What I was trying to say was I am not in need of care in any sense for the forseeable future and any financial decisions now should not be interpreted as such.
At the risk of sounding argumentative what if i spend 60k now to buy a car or two and take a round- the-world cruise, will that be a willful deprivation of assets?
Looking after your younger ones is surely a better spend of money!
Just an opinion and I know people have strong objections to supporting your kids financially.

Sell, downsize & retire

Spend some of the released cash enjoying your retirement !

Give some money to your daughter

Why would I be required to pay her ANY rent if I have 50% share of the property?

If she didn't live there you'd be liable to pay rent on the 50% of the property she owns to show that it's not a deliberate depreciation in the eyes of HMRC/council for care costs.

What is the value of the house?

@Qforcucumber..
260k..ish

There is no IHT to pay on estates under £325k, unless you have savings bringing your estate above this then IHT won't really apply.

Simply put @Regretsandregrets if you spend 60k on round the world cruises then the money is gone and there's nothing left for the council to take - if the house is still there and you're still living in it (especially if your daughter no longer lives there) then they will put a charge on it or force a sale.

Say your daughter moves out to a £200k property. She then has to pay 3% stamp duty as she's judged a landlord - you will have to pay her rent at a reasonable rate, not a token £1 a year!

She marries and gets divorced - ex-spouse could end up with 25% of your house. You can't go into court and argue that it was just to get round IHT and paying council care, and it's actually still your house! So to stay in your own home you may well end up paying out to the ex.

A much simpler option is to downsize and give your daughter a deposit.

Looks like I need to meditate and come up with a better plan!!