Basically, it’s your property and you can do with it as you wish. However, there are things that you need to be aware of.
Transferring ownership of your home to your children can obviously solve some problems such as maintenance costs, but it can create different problems for you.
You need to be very careful if you gift your home as the council could believe you have done this as a way of avoiding care fees.
If the council believes that you have done this, they have the power to take account of the full market value of your home even after it has been transferred to your children.
Similarly, if you sell your home to your children for much less than the market value the difference in the market value and the sale price could be seen by the council as a gift made to avoid paying for your care.
In addition your children become liable to capital gains tax on any increase in the value of the property between the date you gifted it to them or sold it at undervalue and the date they sell it.
It’s important to remember that transferring ownership to your children means you have no control. This could become an issue if you later decide to move to a smaller home and your children disagree with your decision. Also, if family circumstances change you cannot alter who will receive your property when you die.
What about if you later want to release some capital from the value of your home – will your children agree to this?
Before you gift or transfer your property you should get legal advice to make sure that you are not left at a disadvantage later.
Worried about care home fees?
In England, anyone going into care can apply to the local authority for financial help.
How much help you can get depends on how wealthy you are. The value of property is considered as capital. This is assessed along with any savings or investments you have. However, as long as either you or your spouse lives in the family home, the council will not be able to include it as part of your capital.
If you have less than £23,250 in capital you should be able to get some financial help.
The real problems arise when the sole survivor goes into a care home. Unfortunately, this is the point that the council will consider the value of the family home as capital and will almost certainly refuse any financial assistance.
In this position you may have to sell your home to pay the fees. You may be able to ask the council to pay the bills and reclaim them when the property is sold after your death if you meet the criteria for the deferred payment scheme. However, the council has a right to charge interest on the loaned amount.
More details about gifting or transferring property can be found on our website. Alternatively, call and chat to one of our friendly team.