COLUMN: What to consider when gifting a property

For example, if you gift a property and continue to live in it without a tenancy agreement and without paying market rent, it may still be treated as part of your estate for IHT purposes. The same applies when gifting a second property – if you still want to receive the rental income, gifting an asset and continuing to receive a benefit is not an effective way to reduce IHT.

Gifting a property also means you lose control of it. If you continue to live in the property and the new owner loses capacity, dies, gets into financial difficulty or gets divorced, this could leave you without the security of a roof over your head.

There are also long-term impacts to consider – such as how the gift may affect your ability to pay for any care you may need in future. It could also be classed as a deliberate deprivation of capital by the local authority if you did need care in the future. With this in mind, some people might choose not to gift the property now, but to address it in their will so it is handed over to their child after they die.

Before transferring a property to a child, you should also carefully consider the tax implications for them and decide whether it will benefit them in the way you wish.

If the recipient owns another property, they might need to seek their own tax advice, as owning a second property could affect their tax liabilities. On the other hand, if the recipient has never bought a house before, they may lose eligibility for first-time buyer relief and/or face higher stamp duty costs.

Advice on all aspects of gifting a property, can be found by contacting the wills, estates and tax planning team at Wilkin Chapman Rollits. Visit www.wilkinchapmanrollits.co.uk or email me at [email protected]

This column has been provided by Lucy Butterfint, a partner at Wilkin Chapman Rollits and head of wills, estates and tax planning