gift with(out) reservation

by **riccardob** on Sat Jul 23, 2011 7:15 pm

If a child is gifted half of a property by a parents and said parent still lives in the house am I correct in saying that rent should be paid?
How does one establish market rent? The other half is owned by the other parent who still lives in the house too. Am I right in saying that 50% of full rent is then due?

Also in terms of the house being transferred to the child, how is this transaction carried out? Is it just a matter of changing the name of one of the owners at land registry? How is "market" value established? Via a surveyor or estate agent?

Many thanks

by **Lee Young** on Sat Jul 23, 2011 10:05 pm

Best to establish the value of half the property and the full market rent by employing a surveyor. The rent will need to be regularly reviewed because if it falls short of the market a gift with reservation will then arise.

by **IanDarkwater** on Sat Jul 23, 2011 10:59 pm

You havn't mention why parents want to make the gift.

If its about IHT mitigation then the gwr considerations make sense.

If its about residential health care costs mitigation them gwr is irrelevant but other factors may become relevant.

If its neither.........?

by **riccardob** on Sun Jul 24, 2011 10:39 am

its for iht purposes.

by **riccardob** on Sun Jul 24, 2011 10:40 am

Lee Young wrote:Best to establish the value of half the property and the full market rent by employing a surveyor. The rent will need to be regularly reviewed because if it falls short of the market a gift with reservation will then arise.

Thanks Lee.

Does a contract need to be drawn up or is payment of rent and a rent book enough?

by **riccardob** on Sun Jul 24, 2011 10:46 am

Sorry Lee i also forgot to ask you if the gift is made by simply registering change of the owner name at land registry via a solicitor or does other documentation need to be prepared that relates to this sort of transaction?

by **Peter D** on Sun Jul 24, 2011 12:06 pm

I assume the 'child' is 18 years plus. The sibling owner, if not living their will be exposred to CGT on disposal. You should take professional advice on this, depending on the value of the estate your proposed ownership may not be the best was forward. Regards Peter

by **Lee Young** on Sun Jul 24, 2011 7:42 pm

Change of title at land registry is sufficient to evidence the gift.

I would say it is best to have a proper, formal tenancy arrangement.

by **riccardob** on Mon Jul 25, 2011 5:36 pm

Lee Young wrote:Change of title at land registry is sufficient to evidence the gift.

I would say it is best to have a proper, formal tenancy arrangement.

Thanks Lee.

I believe that we need to fill in a transfer form tr1 and on the form specify that there is no monetary exchange hence no sldt.
Am I right in thinking that we also need to complete a deed of gift?

The parent would only be gifting 50% of said property so is it better to have joint tenancy or tenants in common?

by **Lee Young** on Mon Jul 25, 2011 6:01 pm

No deed of gift necessary.

Whether you hold as joint tenants or tenants in common depends on how you want your respective halves of the property to be inherited - likley to be as tenants in common to leave things as flexible as possible, then ensuring your respective wills do what they need to do.