Purchase of a house for children

[James C]

Hello,
If I buy a house for my daughter that she deems as her PPR and I survive at least 7 years from the data of the gift, can you confirm that there will be no tax implications (IHT, CGT or otherwise) on her or myself either on the transfer or a subsequent disposal by her (if she remains in the house until her eventual disposal - claiming PPR relief). I will gift it to her directly, not to a discretionry trust or otherwise.
Also do I need to wait until she reaches a certain age to do this ?

Many thanks
James

[Lee Young]

If you give her cash (which she uses to buy the house) then no CGT consequences on that gift and yes you will need to survive 7 years for there to be no IHT on the gift (or if gift falls within nil rate band, no more IHT paid on your estate).

There can be no prior agreement to allow you to live in the property as otherwise the gift will be negated for IHT puproses and you will be deemed to own the property.

If there is no prior agreement but you do in fact move in to the property then you will probably (depending on the circumstances) fall foul of the new pre owned assets tax regime, possibly meaning your having to pay an annual income tax charge.

If and when you daughter sells the house, if it has been her main residence for her period of ownership then no CGT will arise at that point.

As reagrds her age, no you don't need to wait until she reaches a certain age before making the gift to her, but under 18s can not hold property in the UK, so if she is under 18 you would need to be on the legal title to the property, but I would recommend you execute a declaration of trust recording you own it on her behalf, and when she reaches 18 you would then transfer the title into her name.

[James C]

Many thanks Lee,
Is it the same treatment if I buy the house and then transfer it to her name rather than give her the cash ?

Thanks again
James

[Lee Young]

The only difference would be that there may be a gain between your puchase of the property and your gifting it to her which would be subject to CGT of the property was not your main residence. If not much of a period between the two events then it should not be a problem.

[James C]

Many thanks Lee.

Regards
James