Gifting Property & Deed of Gift
Gifting assets such as a house, cash, shares or a valuable item can be useful in estate planning and a way of supporting loved ones during your life.
However, if you are considering gifting property or other assets, it is important to take legal advice so that you understand the implications and to ensure that you make your gift in the most efficient and secure way possible and avoid the pitfalls that exist.
At Bell Lamb & Joynson Solicitors, we have extensive experience in the complicated area of estate planning, and we can give you clear, straightforward advice on the options available to you. Our expert conveyancing solicitors can deal with the transfer of a property and ensure that your rights and interests are protected.
Our team deals with a full range of estate planning, including the following:
- Gifting property to children
- Gifting property to a spouse
- Gifting property to a family member
- Gifting property to a limited company
We provide a full service, to include advice in respect of tax, trusts and Wills, and where necessary, we can call on the expertise of colleagues with adjacent areas of expertise such as property law.
For more information in respect of our property services, see our Conveyancing page.
Get in touch with our deed of gift solicitors in Liverpool, Runcorn and Warrington
To discuss how we can help with gifting a property and deeds of gift, you can contact us directly via our website, call 03444 124348 or drop into one of our offices in Liverpool, Runcorn or Warrington, where we will be happy to assist you further.
How gifting property works
By making a gift of property, you transfer it to someone during your lifetime, generally to reduce the amount of Inheritance Tax that could be payable on your estate or to give a loved one the benefit of it now, rather than at a later date.
There are a number of legal and tax implications when making a gift, and it is highly recommended that you speak to an expert deed of gift solicitors before proceeding.
One of the main reasons for gifting property is to mitigate Inheritance Tax. A gift made during someone’s lifetime is referred to as a Potentially Exempt Transfer or PET. This is because it may end up being exempt from tax, but there is a possibility that it will not, depending on when the person giving the gift dies.
If they live for seven years or more after the date of the gift, no Inheritance Tax will be payable on its value. If the donor dies within seven years, then Inheritance Tax is payable on a sliding scale, referred to as taper relief, as follows:
|Years between gift and death||Rate of tax on the gift|
|3 to 4 years||32%|
|4 to 5 years||24%|
|5 to 6 years||16%|
|6 to 7 years||8%|
|7 or more||0%|
You should be aware that if you continue to live in a property that you have given to someone, then Inheritance Tax may still be payable on the value of your property as you could still be classed as owning it by the tax authorities.
If you wish to leave your home to a direct descendant, such as a child or grandchild, there is an Inheritance Tax allowance available of £175,000 per person. No Inheritance Tax is payable when an individual leaves assets to their spouse, and unused allowances, including the property allowance, can be transferred to be used by the spouse when the time comes.
The complexity of the rules surrounding Inheritance Tax means it is always recommended that you speak to an expert before deciding on a course of action.
A further point of consideration when gifting property or other assets concerns future care fees. If an individual has given away assets and is subsequently unable to pay for their care, the local authority may investigate any gifting they have made. There is no time limit on this. Where the authority believes that a gift was given in order to avoid funding care, known as deliberate deprivation of assets, they can take steps to recover the asset, for example, by reversing a transfer.
Similarly, if the person giving the gift becomes bankrupt within five years of the date of the gift, their trustee in bankruptcy could void the gift.
Stamp Duty is not payable when gifting property to a family member as the consideration, or price paid, is zero. When gifting property to a limited company, the situation is different, and Stamp Duty is generally payable on the market value when the company is linked to the person giving the property.
Whether or not Capital Gains Tax is payable will depend on the relationship between those giving and receiving the gift. If the parties are connected, for example, parent and child, then Capital Gains Tax will be payable on any gain in value since the date of acquisition. Capital Gains Tax does not apply to someone’s main residence, only to second and subsequent properties.
A deed of gift is the actual legal document transferring ownership. As well as executing the deed of gift, if a property is being transferred it will need to be registered at HM Land Registry.
The drafting and execution of a deed of gift can be dealt with fairly quickly once you have decided on the most tax efficient way of dealing with the gift. Registration of a property transfer at HM Land Registry could take a number of weeks.
Because of the complexity of tax and other rules, you are strongly recommended to take legal advice before gifting property. An expert tax, trusts and estates lawyer will be able to set out the most efficient way of structuring your estate and advise you on legitimately reducing your estate’s Inheritance Tax liability.
There may also be other considerations, such as protecting property for your children from risks such as bankruptcy and divorce. We can advise you of your options for dealing with this to ensure that assets are safeguarded for your loved ones in the future.
How much does a deed of gift cost?
At Bell Lamb & Joynson, we are known for providing quality legal advice and outstanding client care at competitive prices. We will provide you with a realistic estimate of the likely costs at the outset, which will be calculated based on the complexity of your situation and the advice required.