Parents can sell their properties to their children for £1 - but there are 'important' implications

Parents may consider selling their homes to their offspring for as little as £1, but an expert has warned of "important" consequences that come with such a decision. While it is "technically" feasible, Terry Fisher, a property specialist at We Buy Any Home, points out that the transaction involves more than just handing over the keys for a token amount. He highlights that potential inheritance tax and capital gains tax liabilities must also be taken into account.

Fisher clarifies: "Technically you wouldn't be selling it to your child, rather you'd be gifting the property to them. In this case, the £1 asking price is a symbol, known as a consideration." He added: "The change in ownership would qualify as a 'gift', so while it is technically possible to sell a house to your child for just £1, it's important to understand the implications.", reports the Express.

"The process of ownership transfer can be complicated, time-consuming and expensive. A house is a significant asset with legal and financial implications for both parties involved. When one is given as a gift, it is vital to ensure that the transfer of ownership is done legally and through the correct channels."

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It is essential to have the transfer of ownership legally acknowledged, and individuals are advised to engage with a solicitor to lawfully transfer the deeds, akin to a standard sale to a new buyer. Mr Fisher emphasised the importance of understanding the tax consequences when gifting property: "It's essential to be clear on any tax implications for you and the recipient. If you're giving a house as a gift to avoid inheritance tax in the future, be aware that the recipient may still be required to pay this tax if you pass away within seven years."

He also warned about potential capital gains tax liabilities: "As the previous property owner, you may still be liable to pay capital gains tax when gifting a house. This may be the case if the property's value has increased since you first acquired it."

The need to consider Stamp Duty Land Tax was highlighted for those gifting to an existing homeowner: "They may be required to pay Stamp Duty if they take over an outstanding mortgage on the gifted house."

Mr Fisher advised people to think about their own financial well-being before proceeding with such a gift: "If you are gifting a house that you currently rent out to tenants, consider how this will impact your ongoing income."

He also urged individuals to ensure that the recipient is financially prepared for homeownership: "Think about the regular bills, maintenance, and upkeep costs before you decide if it's the right gift for them."

Lastly, he cautioned about long-term financial effects: "While the initial sale price might be small, there could be future financial repercussions."

Mr Fisher warned: "Transferring ownership of a property to a child for a token amount could affect their eligibility for mortgages or loans in the future. Lenders may question the validity of such transactions and may require additional documentation or assurance."