A law firm for life

Gifting Property

As a law firm for life, we advise clients from the purchase of their first home to decisions about their property in later life. For many of our clients, as they get older, they are interested to understand how they can leave gifts to their family during their lifetime. This allows our clients to see their families benefit from these gifts while they are still here. However, it is important to understand that there are rules around gifting property and you must make sure you understand these to avoid unintended consequences.

Below we outline some of the key considerations in terms of inheritance tax and care home costs. There are also many other issues to consider – from the impact on your Will to your own financial circumstances. If you are considering gifting property, please get in touch. Our expert team are on hand to advise you and would be delighted to review your options with you.

What Are the Rules?

Firstly, it is important to consider the inheritance tax implications of gifting property. If you make a gift of your home in life, move out, and live for more than seven years, there are no inheritance consequences and there will be nothing to pay. If you do not move out, you will generally need to pay rent to the new owners at the market rate.

However, if you die within seven years of gifting the property, the 7-year inheritance tax rule applies. This means that inheritance tax will be charged on the asset. If you die within three years, inheritance tax is charged at 40%. If you live for between three and seven years, there is a sliding scale at which tax is charged :

  • 0-3 years: IHT rate 40%
  • 3-4 years: IHT rate 32%
  • 4-5 years IHT rate 24%
  • 5-6 years: IHT rate 16%
  • 6-7 years: IHT rate 8%

Separately, it is important to consider the implications for care home costs. Care home costs assessments take into account the value of your property. If you have gifted your property and then need to go into care, there will be a consideration of whether this gift was a ‘deliberate deprivation of assets.’ If the local authority finds that this was a deliberate deprivation of assets, the value of the asset can still be taken into account in the financial assessment. It is therefore important that you seek legal advice if you are considering gifting a property, to make sure that your intentions are correct and will not have far-reaching consequences in the future.

Contact The McKinstry Company Estate Planning Solicitors

At The McKinstry Company, we put our clients at the heart of our work.

Our goal is to generate and maintain strong and lasting client relationships rather than a transactional approach to the work which we undertake. We are a law firm for life and will work with you to ensure that you receive the best possible legal advice.

If you want to learn more about the rules around gifting a property, get in touch today. You can contact us on 01292 281711 or via our online contact form. Our friendly and dedicated team are here to help you.

Thiona McQuiston Partner View Thiona's Profile

Thiona is Head of our Private Client Department where she is involved in all aspects of property, asset protection, Powers of Attorney, Guardianship, Wills and winding up estates.  

Having joined TMC almost three decades ago in a support role, Thiona went on to graduate with a Bachelor of Law from the University of Strathclyde in 1999.  When embarking upon her Law degree, she was told by the late Professor Sinclair “My dear, you have the University of Life” and that as a bedrock equips Thiona to advise clients on the aspects of their affairs in which she is involved.

Thiona enjoys walking, yoga, travel and spending time with her husband and family, including her dog Molly.

Debbie Dunlop Partner View Debbie's Profile

Based in our Girvan office, Debbie is a Partner who is highly experienced in Private Client work, particularly in the agricultural and farming sectors. She used to enjoy travelling the world, but now married to a farmer, she spends her weekends in wellies, feeding cattle or on the back of a quad bike. Debbie is also a member of the Agricultural Law Association.

Having lived in Rome for a number of years, Debbie also studied Law at the Université d’Auvergne in Clermont-Ferrand – as a result, she is fluent in both Italian and French. She can also speak a bit of Spanish, thanks to travelling around various Central and South American countries, including walking the Inca trail. She has managed to convince her husband that the cattle in Argentina will be worth a look at some time soon!

A keen runner, Debbie has competed in 10Ks and half marathons, even completing the Rome Marathon. This now comes in handy during lambing time chasing after ewes.

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