Property expert explains how parents can sell their house to their children for £1 - but there are 'implications'

Parents considering selling their homes to their children for a mere £1 must be aware of the 'important' implications, a property expert warns. Recent data from We Buy Any Home indicates that Google searches in the UK for "Can I sell my house to my son for £1" have skyrocketed by 5,000 percent over the last 30 days.

Terry Fisher, a property specialist at We Buy Any Home, points out that while it is 'technically' possible, the transaction involves more than just handing over the property for a token amount. He highlights that potential inheritance tax and capital gains tax liabilities must also be taken into account, reports the Express.

"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," Terry says.

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He continued: "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."

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."

Ensure the transfer of ownership is legally recognised

People should always work with a solicitor to lawfully transfer the deeds in the same way they would when selling a house to a new owner.

Terry said: "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."

"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."

Consider Stamp Duty

People also need to consider Stamp Duty Land Tax if they plan to give a house as a gift to somebody who has owned property before.

Terry explained: "They may be required to pay Stamp Duty if they take over an outstanding mortgage on the gifted house."

Consider the financial impact on yourself

Before giving a house as a gift, people should also consider the effect it might have on their financial security and estate planning. The expert said: "If you are gifting a house that you currently rent out to tenants, consider how this will impact your ongoing income."

Make sure the recipient can afford to own the house

Consider if the person being gifted the house can afford the property ownership. "Think about the regular bills, maintenance, and upkeep costs before you decide if it's the right gift for them," said Terry.

Consider future financial repercussions

While the initial sale price might be small, there could be future financial repercussions. Terry said: "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."