danuitti
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If you live in California, I wouldn't... They would be TAXED to death.
First, do the MATH. What I mean is, learn what all of the costs would be to do the transfer and what taxes would be due, and what property taxes would have to be paid. You might find that your 2 daughters can't afford the house, and everyone would be a loser.
Always start with an attorney. |
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Flick W
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First the good news - no income tax on gifts so they wouldn't pay any of that. And no Stamp Duty Land Tax if there is no payment.
However......
2 potential taxes:
1. Inheritance tax - if you survive seven years after the gift there should be no tax BUT you have to be really careful. If you continue to live in the house then it would still be deemed to be your property for inheritance tax purposes and it would be taxed when you die.
2. Capital gains tax - a gift is a 'disposal' for tax purposes and a gain will have to be calculated based on the assumption that you sold the property for its market value (despite the fact that you are actually gifting it). If you have lived in the house since you bought it this will exempt the gain though.
Complex area - best way is to gift, and pay rent to daughters if you continue to live there. That means that they'll have to pay tax on the rent though! |
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COCHYN
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There are many factors to consider. Firstly there is no tax on the transfer, it is considered a gift. Thereafter I assume you are either doing this for inheritance tax or long term care purposes. For inheritance tax purposes, if you continue to live in this house, on your death it will be considered a gift with reservation, and the house value will fall back into your estate for inheritance tax purposes. If you are not going to live in the house, for it's value to be outside of your estate for inheritance tax purposes, you must live 7 full years. Should you die between years 3 and 7 and your house value now is worth more than the nil rate band at the time of death, there is some taper relief available.
If you have done this to avoid potential care home costs, there is no guarantee that this will work. It is considered 'deliberate deprivation of assets' and subsequently. the authorities can retrieve your home (as long as nobody else lives there) and sell it to fund care. (Really harsh but true I'm afraid.) |
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Franco
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In UK you do not pay any tax if you give it away, since you made no profit.
However, if you die within 7 years, the value of the house will be added to the rest of your assets to decide the inheritance tax. But even then, there is a sliding scale.
An important matter is that you cannot carry on living in the house, otherwise the gift is not considered valid. |
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taketwo
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if you live for 7 yrs after transfer they wont pay any tax, but check this out. |
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dan m
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If you stay alive for 7 years there is no inheritance tax. If you die within 7 years the gift is considered inheritance and can be taxed up to 40percent. This is to stop people giving everything away before they die to avoid the government getting all their hard earned cash. SO DO IT QUICK. |
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FIONA S
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if you stay alive for 7 years no tax,
if you die before that it depends how many years you lived. |
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ilovebigbrother
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Clever and common way to avoid tax, if you stay alive for 7 years no tax due!!!!! Woo Hoo lets beat the tax man for a change! |
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Al Zymer
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Previous answers near the mark, but capital gains tax applies if the seller does not live in the property when selling - not sure of the length of time that applies....... |
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Mim
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I think they would not have to pay tax if they are living in it but if they are not it will come under inheritanse tax I think when you die if you are the only one living there then it counts as inhearitance for up to 6 years after you give it them I think |
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