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Gifting 2nd home to my son?
#1
Hello

I have tried searching for help on this subject but most articles keep going on about the property being subject to brightline testing.

I have my own house and lived in it freehold for 26 years. I bought a 2nd house across the road 5 years ago and it is also freehold and not subject to the brightline test. I am now 64 years old and feel I have sufficient money to see out the remainder of my life without having to sell the 2nd house. 
Here is my question: My only child who is 32 currently lives in the house and I would like my son to have the house as a gift without any money changing hands. Can I do this without having to place the house into a trust or pay a huge tax bill as I simply want him to have a good start in life? I am not sure what would happen if for some reason I ended up in a rest home at some stage as my current house would be more than enough equity to pay rest home expenses if required.

Thanks in advance for any input.
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#2
Do it soon... Although you seem to be well protected for the future, any future applications for government funding for aged care etc requires past financial records and gifting high value items within the statutary period is one thing they look for. I believe it can be done by a transfer of ownership quite easily through a conveyancing practice, but your family solicitor - and you should have one, can cover all the current legal bases for you. My information is a good twenty odd years old so not to be relied on. No need for a trust or any complicated stuff far as I know, but you do need better advice than my ancient life experience!
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#3
from reading here I think either way you're likely to get stung...
https://www.nexia.co.nz/thinking-of-help...r-read-on/

Maybe the better option if it is solely about helping your son out, is to just let them stay their rent free or for a nominal amount to cover insurance and rates etc, and inherit the house in due course...
The world would be a perfect place, if it wasn't for the humans.

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#4
I want to do the same for my son but unfortunately he's in UK right now. We helped our daughter into a NZ house in 2013 but it was always in her name. The house should have been put into your son's name from the start, I believe.
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#5
(04-07-2022, 06:01 PM)king1 Wrote: from reading here I think either way you're likely to get stung...
https://www.nexia.co.nz/thinking-of-help...r-read-on/

Maybe the better option if it is solely about helping your son out, is to just let them stay their rent free or for a nominal amount to cover insurance and rates etc, and inherit the house in due course...
Yeah just hope in 20 years if I am still here I dont end up in a rest home and the government take both houses off me leaving my son next to nothing.
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#6
There has to be a way of doing it, legally and above board. The law was never designed to hurt family gifting. I would see a solicitor and get their advice.
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#7
(05-07-2022, 10:43 AM)Oh_hunnihunni Wrote: There has to be a way of doing it, legally and above board. The law was never designed to hurt family gifting. I would see a solicitor and get their advice.
I don't think it was ever intended to prevent family gifting - it is moreso an issue of preventing family gifting to reduce assets below thresholds such that one can then collect government subsidies for rest home fees...
The world would be a perfect place, if it wasn't for the humans.

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#8
Clearly not the case here.
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#9
(05-07-2022, 11:57 AM)Oh_hunnihunni Wrote: Clearly not the case here.
does post #5 not suggest otherwise?
The world would be a perfect place, if it wasn't for the humans.

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#10
Interesting point.

Getting into a situation where we need government support is something few people like to think about, even to the extent of trying to avoid it by various means. Thing is, that attitude leads to opinions about others that can be disturbing. For instance, one of our neighbouring pensioner villages has a neighbour with very definite views on the elderly tenants - who btw are law abiding, neat and tidy, and no problem to anyone. But every time the contractor arrives to trim the hedge bordering the two properties, out she comes and abuses him for trimming the top, telling the world she 'doesn't want to see THOSE people ' from her windows.

Every single one of my neighbours had no intention of ending up here. But here we are, and deeply grateful for it. Why are we here? Family debt, accident or illness, divorces, widowing, personal catastrophes - they pay no attention to wealth, as a quick glance at post lottery winner stories reveals. Doesn't mean making plans isn't a really good idea, but even the best can be overturned in an instant and all the wealth in the world can't stop it.
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#11
(05-07-2022, 12:49 PM)Oh_hunnihunni Wrote: ... Why are we here? Family debt, accident or illness, divorces, widowing, personal catastrophes - they pay no attention to wealth, as a quick glance at post lottery winner stories reveals. Doesn't mean making plans isn't a really good idea, but even the best can be overturned in an instant and all the wealth in the world can't stop it.

Exactly. I bitterly resent those smug people who have never encountered ill health or other catastrophes and have such a narrow world-view that they take personal credit for their own good luck. All it takes is an unforeseen disaster (in our case it was a family member with meth addiction, whose life was saved not just with love but also with a huge amount of expenditure) and the best of plans and rainy-day funds can be ruined.
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#12
Perhaps, if you haven't got a family solicitor it may be worth contacting CAB, as they do free legal advice & so could advise as to whether or not you need a lawyer & the best way to do it.

Perhaps you could sell the house to your lad, with a deposit of a very modest sum (the least legally possible) & he could pay it off at $20 pw or something similar.
in order to be old & wise, you must first be young & stupid. (I'm still working on that.)
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#13
Or maybe just sell it and hand over the dosh so he can pick a place he wants. I know my kid always preferred that element of choice and control, and still does - as far away as possible, lol.
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#14
(05-07-2022, 03:19 PM)Lilith7 Wrote: Perhaps you could sell the house to your lad, with a deposit of a very modest sum (the least legally possible) & he could pay it off at $20 pw or something similar.
$20/week is only $1,040/year. At that rate the OP's equity in the property isn't going to change to any real degree.

Consulting a lawyer or accountant is the best approach for quality advice.
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#15
(06-07-2022, 07:20 AM)Oh_hunnihunni Wrote: Or maybe just sell it and hand over the dosh so he can pick a place he wants. I know my kid always preferred that element of choice and control, and still does - as far away as possible, lol.
Yeah I am not sure if this would be legal. I will ask my accountant next time I see her.
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#16
(06-07-2022, 10:18 AM)harm_less Wrote:
(05-07-2022, 03:19 PM)Lilith7 Wrote: Perhaps you could sell the house to your lad, with a deposit of a very modest sum (the least legally possible) & he could pay it off at $20 pw or something similar.
$20/week is only $1,040/year. At that rate the OP's equity in the property isn't going to change to any real degree.

Consulting a lawyer or accountant is the best approach for quality advice.
It is. Once you've picked a good one of either variety...
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#17
(04-07-2022, 04:48 PM)Corky Wrote: Hello

I have tried searching for help on this subject but most articles keep going on about the property being subject to brightline testing.

I have my own house and lived in it freehold for 26 years. I bought a 2nd house across the road 5 years ago and it is also freehold and not subject to the brightline test. I am now 64 years old and feel I have sufficient money to see out the remainder of my life without having to sell the 2nd house. 
Here is my question: My only child who is 32 currently lives in the house and I would like my son to have the house as a gift without any money changing hands. Can I do this without having to place the house into a trust or pay a huge tax bill as I simply want him to have a good start in life? I am not sure what would happen if for some reason I ended up in a rest home at some stage as my current house would be more than enough equity to pay rest home expenses if required.

Thanks in advance for any input.

I would totally recommend you get advice from a property lawyer, or at least a property accountant. Someone who really knows.

I presume your use of the word "freehold" intends to mean "unencumbered" - ie with no mortgage. "Freehold" actually means the opposite of leasehold, regardless of mortgage status.

To refer to your question, you seem to understand something of where the risk might come from - the potential future need for rest home care. It's not as simple as "my current house would be more than enough equity to pay rest home expenses". If you need resthome care you need to pay for it. If you have cash, fine. You can then also offset the costs with rent from the house you no longer occupy. And depending on how much cash you have and rent you can get, that might be sufficient. The resthome is likely to be over $80,000 a year at today's numbers, so if you are in the home for years (which can happen) and you run out of cash and the rent you take in is not enough then you would need to move to Plan B. Which is to raise some more money by selling your house.

If you reach a point where the proceeds from your house have run out, you are likely to then ask the government for assistance. They would then look into your affairs and, if you had sold or gifted your other house to a family member that might need to be clawed back. Even if you did it 20 years before for totally unrelated reasons. I had a family member in this situation - they had bought a half share in their parent's house  more than 20 years before the parent needed care. But the fact that half of the house was in different ownership made no difference. It was resolved, but was a very near thing, and scary at a time when everyone was feeling pretty vulnerable emotionally.

So please, get proper advice on how you can give what you want to your son without the risk of him losing it in future. Or you not being able to get the care you need when you need it.
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