Surrey Homes | SH58 | August 2019 | Restoration & New Build supplement inside

“Apart from the obvious risks of
giving away your home, such as
those you give it to getting divorced
or becoming bankrupt, there are a
number of other issues to consider.”
any rise in value will be subject to Capital Gains Tax and it
will be part of your estate for Inheritance Tax purposes.
What are the potential repercussions of buying for a relative?
If you buy a house which you then gift to a relative,
you will no longer have any rights in relation to that
property or any call on the funds used to purchase it.
If you want to retain an interest in the property or the
funds used to buy it, it’s important to take legal advice.
Can I sign my current property over to a relative
and what are the pros and cons of doing this?
This is a common question when people are considering
inheritance tax or the potential cost of residential care.
Apart from the obvious risks of giving away your home,
such as those you give it to getting divorced or becoming
bankrupt, there are a number of other issues to consider.
To be effective for IHT you would need to survive for
seven years after gifting and pay the new owners a market
rent to continue living in the property. When assessing
the level of support for residential care, local authorities
can look at past gifts and take a view on whether the
person requiring funding ‘deliberately deprived themselves
of capital’ in order to get a higher level of support.
There is also the risk that should you wish to
downsize in the future and the new owner agrees
to sell, they will be subject to Capital Gains Tax on
any rise in the value since the time of the gift.
Can I buy a property to rent out to a family member?
You can rent a property to family members. If you choose
to rent at below market value to a ‘Connected person’
such as a child or grandchild this will restrict the expenses
you are able to offset against your income tax liability.
Provided a rent is charged you can normally deduct
the expenses up to the level of rent received, any excess
expenses can’t be carried forward to use in a later year.
Steven Aslett works closely with the Ashford, Tenterden &
Whitfield offices of NFU providing specialist advice to their
new and existing clients on investment, retirement planning,
protection and Inheritance Tax mitigation.
For more information, visit nfumutual.co.uk/ashford
or call Ashford 01233 884829 / Tenterden
01580 849353 / Whitfield 01304 899650.
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