Partial transfer of home to adult child.....tax implications

P

Paul1313

New Member
Messages
2
Hi, as part of a divorce settlement my other half wants to ensure that the family home goes to our child on my death (which is fine with me). We are looking for the best way to ensure that I have a place to live, the child gets the property, and our gift tax liability is hopefully zero.

The house is worth about 600k. Would it make sense or is it possible for my spouse to transfer their half of the house into the child's name. Would revenue see that as a 300k transfer for tax purposes.

Also open to other solutions
Thanks
 
The more I think of this the worse an idea it is.

You would own a house 50/50 with your child. Let's say mother and son to make it easier.

Even if you get on very well, your son decides he wants his half so he insists on selling the house. He would have to take legal action, but it would eventually succeed although there wouldn't be much left for either of you after High Court costs.

Mothers and sons who have gotten along fine for years, sometimes fall out.

You want to bring a new partner to live with you in your house, and your son forbids it.

He wants to bring his partner to live with him in his house and you forbid it.

Either party could make like unbearable for the other.
 
If you dismiss all the above by saying "we would never fight over it" another good reason is that from time to time, First Time Buyers have certain tax and other advantages.

By owning half a house, he would probably not qualify as a first time buyer and would lose these advantages.
 
So what is the alternative?

The simplest is for your ex to rely on you to make a will leaving the property to your son. You could change your will at any time, so he has no guarantee. But that really should be the position you insist on.

But your circumstances could change. You get into a new relationship and you have more children. Your son is doing very well financially, so you want to leave the house to your new partner/husband or your other children.

I do think that you should be free to do that.

If you marry again, your new husband may well have rights to the house which might trump any agreement.
 
If your ex is being extremely generous in leaving the house to you but puts in a condition that it passes to your son on your death, then so be it. A generous deal is better than no deal because you can't agree.

But the wording should be along the lines of "You will make a will to leave this house or any other house purchased with the proceeds of sale to your son on your death. and nothing in this agreement prevents you from selling this house or any other house purchased with the proceeds of sale".
 
Are you also in control of the way your ex will manage his/her financial assets after the divorce?
 
You must log in or register to reply here.
Back
Top