Skip to main content

Giving Away Your Home in Chesterfield, Sheffield, Dronfield and Mansfield

For most of us, property is the most valuable asset we own. Whether it’s the family home, a holiday house away, or properties owned as an investment, they represent a large proportion of our personal wealth.

With property being so valuable, it is usually the determining factor in whether or not you have to pay for Residential Care in your later years, whilst also forming the bulk of your overall estate value when calculating Inheritance Tax.

Many people are therefore tempted to transfer their properties into the names of their children as they enter retirement, in an attempt to reduce care home fees and inheritance tax. Whilst this may seem like a straightforward solution, the reality is that it can often fail to have the desired effect and may actually cause greater difficulties for yourself and your family.

Inheritance Tax

A common misconception is that you are completely protected by the ‘Seven Year Rule’ when giving away your property, preventing you from having to pay any inheritance tax at all after a period of seven years.

Whilst this seven year rule does exist (and offers full protection for gifting cash and assets), when it comes to property there is an important caveat. Giving a property away but continuing to live there is considered a ‘Gift with Reservation of Benefit’.

Should you wish to continue living in the property, you must pay a fair rent to the new owner (‘fair’ being based on rents charged on similar properties in the area) and continue to pay your share of the bills, all under a formal tenancy agreement drawn up by a solicitor. As ‘landlords’, the new owners of the property would also now be responsible for self-assessing and paying the income tax on the rental payments.

Should you give the property away, but continue to live there rent-free, then HM Revenue & Customs will still consider it a part of your estate when calculating inheritance tax, regardless of how much time has passed since you gave it away and paying no attention to any ‘Seven Year Rule’. This would result in no inheritance tax saving whatsoever.

Residential Care Fees

Should you require residential care and ask the local authority to pay for some or all of your care fees the local authority will carry out a full review of your assets and income.   This may include investigating the circumstances of any transfers of your assets.

Unfortunately, the Local Authority may well conclude that giving away your property was a ‘deliberate deprivation of capital’, meaning that you gave away your property in an attempt to avoid paying for residential care. There is no ‘Seven Year Rule’ to protect against this, and the decision would mean that you would still be required to pay the full amount of your care costs regardless.

Whilst you may be close today, it is an unfortunate reality that families do fall out. Should the new owner of the property decide to sell the property, you could well find yourself no longer having anywhere to live. Similarly, should you give away your property and then still need to pay for care fees in the future, you would no longer have a way to afford them and would receive only the most basic care with no choice over where you are placed.

Other Considerations

Whilst it is important to make provisions for the future, you should keep in mind that you may never actually need residential care, in which case you could find yourself giving away your property needlessly. Even taking care fees out of the equation, gifting a property has its own associated drawbacks, and can deprive you of your security as you grow older. You would not be able to use the property to raise money for example, through an Equity Release or Re-Mortgage, and would find yourself reliant on the financial stability of someone else. If you were to transfer your home to your child and they find themselves getting divorced, facing financial difficulties, or even passing away before you, then you could well find yourself losing the right to live in your own home.

Being gifted a property also has implications for the person receiving it. Giving your property to your children could create a capital gains tax problem for them. In trying to reduce inheritance tax you could well find yourself inadvertently creating an even larger tax bill for your children. The property would then be counted as being theirs for their own Inheritance Tax Band purposes, and will be taken into consideration when calculating Stamp Duty Land Tax on any future property purchases of their own they may make.

As you can see, giving away your home is not quite as straightforward a solution as it may first appear. If you are considering giving away your property, we would highly recommend speaking to one of our specialist solicitors before making any decision, who will be able to assess your particular circumstances and advise on the best way forward.

 

Meet the Team

Everything was excellent.

Mr & Mrs G, Upper Newbold

Will Writing

Friendly, sensitive, thorough. They took a huge weight off our shoulders.

Mr & Mrs L, Calow

Excellent service, prompt and courteous. It gave us peace of mind.

Mr & Mrs S, Mansfield

Probate

Amy was very easy to talk to. Felt like I could ask her for anything.

Mrs I, Hundall

Lasting Power of Attorney

Can I just say It has been an absolute pleasure dealing with you, professional and friendly service continued. You are a credit to Banner Jones.

Mr C & Mrs B, Chesterfield

Will Writing

Excellent service. Very cheerful, family friendly feel. Great waiting area, friendly receptionists. Warm and cosy.

Mrs P, North Wingfield

Was most impressed with the sympathetic approach and help my niece and I received from Kathryn Wheeldon on the occasion of the death of my sister. She explained everything simply and fully. I was so pleased I opted to ask her to draw up a new will and lasting power of attorney.

Mrs W, Dronfield

Yours has been an excellent service on the three quite different matters you have dealt with over several years. We have total confidence in Banner Jones and will continue to regard you as our first choice solicitors.

Mr & Mrs H, Dronfield

Very efficient, friendly and professional. We would definitely recommend to friends and family. They made the whole experience problem free.

Mrs W, Mansfield

We’re really grateful for the work you did for us. 10 out of 10!

Mr & Mrs S, Bridlington

Very easy to make appointments, very personal service from all people at Banner Jones, my solicitor was very friendly and put me at ease. If I needed a solicitor again, Banner Jones would be the first on my list.

Mr C, Dronfield

Brilliant service, kept well informed all the way through the process. Would definitely recommend.

Miss H, Nottinghamshire

Cannot fault the service, efficient, prompt and cautious. Matters explained very well and clearly. Pleasantly surprised.

Mr & Mrs D, Mansfield

Service provided was excellent. All the staff were very helpful, considerate and professional. I would highly recommend to friends and family.

Mr W, Nottinghamshire

Kat, the solicitor who assisted in arranging for the deputyship for my mother was extremely helpful in what I call distressing time where control of my mothers affairs have been passed onto me. Many thanks Kat for the pleasantness.

Mrs H, Chesterfield

Outstanding service. So very helpful, knowledgeable and easy to understand. A pleasant member of your team!

Mrs K, Sheffield

Very good service from a kind and caring adviser

Mr & Mrs L, Buxton

We were very satisfied with the help and communication received from Banner Jones.

Mr & Mrs B, Sheffield

Professional advice provided in a friendly manner, taking time to ensure everything was fully understood. A stressful situation was dealt with in an extremely sensitive way. Thank You.

Mr G, Chesterfield

I had my Will prepared and couldn't have been happier with the service. It was done just as I requested, and very quickly. I can now continue with my life without any worries. Would definitely recommend.

Mrs D, Chesterfield

Jenna handled our business very efficiently and gave us very good advice and information and was always available to discuss matters arising. We were pleased with the outcome and the cost of the services.

Mr M, Chesterfield

I spent a comfortable time with Mrs Nikki Spencer, she was efficient, polite and knowledgeable about doing my Lasting Power of Attorney for me. I had no issues.

Mrs W, Mansfield

Talk to our team

We take data privacy very seriously, and we want you to understand and feel confident about how we collect, store and handle your personal data. If you’d like to find out more you can read our Privacy Policy.