Can I gift my home to my children and still live there?
However, in order for this type of gift to become effective, there are certain rules in place. Any person gifting a property is not permitted to retain any benefit over the gift. For example, if a parent wishes to gift their main residence to their children but the parent continues to reside there for free and still treat it as their main home. This would be classed as a gift with reservation of a benefit. Meaning that the property’s value may be treated as though it never left the parent’s estate even if 7 years have passed and the property title has been transferred. Ultimately, the gift would fail, and inheritance tax may become payable on the property.
In this situation, to prevent the gift from failing, the parent could pay the children receiving the property market rent. It is important to remember that market rent means actual market value rent which would need to be reviewed regularly. This would need to be paid by the parent to the children and declared by each child’s self-assessment tax returns which may incur income tax. In addition, the gift can only be satisfied if the child retains the money fully and does not gift this back to the parents.
It is advisable that if you are considering making any gift to your children that you seek legal advice from an expert in estate planning to explore options as to how you can leave your property to your children so that you can have peace of mind for when the time comes.
Sometimes a Trust may be a more viable option but due to their complex nature it is again wise to speak to a professional.
If you would like more information or would like to have a Will prepared for yourself, please call us on 01708 784069 or email Emma Boys-Smith directly emmaboyssmith@mplaw.co.uk
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