Is it legal to gift my property in my lifetime?

 

For those looking to make plans for their family’s future, questions are often raised about what is possible to protect and pass on your assets.

In this Is it legal to, we explore the law surrounding the gifting of your property in your lifetime.

 

Is it legal to gift my property in my lifetime?

 

Yes, you can gift your property during your lifetime. However, there may be some tax implications involved in doing so.

 

Why would I gift my property to someone during my lifetime?

 

The main reason a person would gift their property during their lifetime is to reduce their Inheritance Tax liability upon death.

You have a tax-free amount on death of £325,000 (‘nil-rate band’) and you may also be entitled to deduct a further tax-free amount of up to £175,000 against the value of your home (‘residence nil-rate band’).

If you are married, then these thresholds will not be used when the first of you passes away, and subsequently transfers to the surviving spouse’s estate (meaning that the survivor’s estate can be up to £1,000,000 tax free).

If your estate exceeds the tax-free amounts, then gifting property may be a good option to reduce the Inheritance Tax liability.

 

Is this a certainty?

 

For gift to fall outside of your Estate, you must survive the gift for at least seven years but potentially up to 14 years. If you die within seven years of making the gift, HMRC includes the value of the gift when assessing how much Inheritance Tax may be payable, meaning that you may not reduce your estate’s liability after all.

 

 

Are there any consequences to gifting my property?

 

Intentional deprivation of assets – if the local authority feels that your reason for the gift was to reduce assets to avoid paying care fees, they could reverse the gift.

Control – Once the transfer of the land is completed, you will no longer have any rights over the land.

Capital Gains Tax – you may be liable to pay Capital Gains Tax on the gift. We always recommend that you speak to an accountant for independent advice.

 

For any advice on gifting property/land, our Wills, Trusts & Probate team are always happy to provide professional support and assistance. Please contact them for more information.

 

This article was produced on the 18th September 2024 by our Wills, Trusts & Probate team for information purposes only and should not be construed or relied upon as specific legal advice.