Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • planningtogo
    • By planningtogo 8th Oct 16, 6:58 AM
    • 7Posts
    • 0Thanks
    planningtogo
    Selling 1 house buying 2
    • #1
    • 8th Oct 16, 6:58 AM
    Selling 1 house buying 2 8th Oct 16 at 6:58 AM
    Hi We plan to sell our house in London which is worth approx. £415k and move to an area where house prices are lower.
    As I'll be retired then getting to work etc. will not be a problem.
    We hope to buy a house for £250k and with the money left over buy another one for £150k for our daughter and her 2 children as at the moment they are on housing benefit so we just want them to live without claiming any benefit's as she will be able to pay gas / electric / council tax /food from her wages .
    My question is what's the best way to do this regarding tax , when we move should 1 house be in my wife's name and the other house be in my name?
    I don't want my daughters house to be in her name as her partner isn't very good with money and I want them to have the security of a permeation home.
Page 1
    • agrinnall
    • By agrinnall 8th Oct 16, 9:34 AM
    • 15,643 Posts
    • 11,342 Thanks
    agrinnall
    • #2
    • 8th Oct 16, 9:34 AM
    • #2
    • 8th Oct 16, 9:34 AM
    The answer depends on what aspect of tax you are concerned about. If it's Inheritance Tax then there's not enough information to give an answer. One tax you will probably be liable for is the additional Stamp Duty on second homes, so you'd pay an extra 3% on the £150,000.
    • planningtogo
    • By planningtogo 8th Oct 16, 10:23 AM
    • 7 Posts
    • 0 Thanks
    planningtogo
    • #3
    • 8th Oct 16, 10:23 AM
    extra tax
    • #3
    • 8th Oct 16, 10:23 AM
    Yes as I'm not renting the other house out I thought I one house was in my name and the other in my wifes name would I only pay the normal stamp duty ?
    • p00hsticks
    • By p00hsticks 8th Oct 16, 11:15 AM
    • 4,922 Posts
    • 4,323 Thanks
    p00hsticks
    • #4
    • 8th Oct 16, 11:15 AM
    • #4
    • 8th Oct 16, 11:15 AM
    Yes as I'm not renting the other house out I thought I one house was in my name and the other in my wifes name would I only pay the normal stamp duty ?
    Originally posted by planningtogo
    Married couples are treated as a single entity for the purposes of the new Stamp Duty rules
    • Pennywise
    • By Pennywise 8th Oct 16, 11:27 AM
    • 8,168 Posts
    • 14,234 Thanks
    Pennywise
    • #5
    • 8th Oct 16, 11:27 AM
    • #5
    • 8th Oct 16, 11:27 AM
    You'll be liable to capital gains tax on the property lived in by your daughter, being on the gain between final selling price and original purchase price (adjusted for other costs of buying & selling). You've never lived in it so there's no main residence or lettings relief.

    In terms of capital gains tax, no benefit in one being owned by you and the other by your spouse - in fact, likely to be better if both owned jointly.

    I'm sure others will advice on inheritance tax.
    • planningtogo
    • By planningtogo 8th Oct 16, 1:38 PM
    • 7 Posts
    • 0 Thanks
    planningtogo
    • #6
    • 8th Oct 16, 1:38 PM
    • #6
    • 8th Oct 16, 1:38 PM
    Oh no sounds like I cant win , If I have to pay the extra stamp duty there will not be enough money left over to buy a small house for daughter. Thanks for replying
    • uknick
    • By uknick 8th Oct 16, 1:52 PM
    • 489 Posts
    • 219 Thanks
    uknick
    • #7
    • 8th Oct 16, 1:52 PM
    • #7
    • 8th Oct 16, 1:52 PM
    One option could be to buy the house, pay the stamp duty and then rent it to your daughter under a standard lease agreement.

    Fund the extra stamp duty with a short term loan and use the rental income to pay it off.

    She will be able to continue claiming housing benefit and the other associated benefits as she will be considered a normal tenant.


    When the loan is repaid she comes off benefits.

    If your rental income is less than or equal to the loan payments required for the purchase then there will be no income tax implications.

    A family member has this arrangement with their mother in law.
    • planningtogo
    • By planningtogo 8th Oct 16, 3:53 PM
    • 7 Posts
    • 0 Thanks
    planningtogo
    • #8
    • 8th Oct 16, 3:53 PM
    • #8
    • 8th Oct 16, 3:53 PM
    That's sounds like a good plan , can she still claim if the house is owned by a family member ? It would only be until extra stamp duty loan was paid up .
    Thanks for your help
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 8th Oct 16, 4:05 PM
    • 2,696 Posts
    • 2,964 Thanks
    Bluebirdman of Alcathays
    • #9
    • 8th Oct 16, 4:05 PM
    • #9
    • 8th Oct 16, 4:05 PM
    That's sounds like a good plan , can she still claim if the house is owned by a family member ? It would only be until extra stamp duty loan was paid up .
    Thanks for your help
    Originally posted by planningtogo
    Only if she is paying a market level of rent, and this can be evidenced by a contract.
    • uknick
    • By uknick 8th Oct 16, 4:14 PM
    • 489 Posts
    • 219 Thanks
    uknick
    For the last 15 years or so my brother's MIL has lived in a house owned by him and his wife. She's been the only tenant since they bought the house

    I did question the legitimacy of this on here a couple of years ago, but the view seems to be, if the MIL didn't get housing benefit to live in the property someone else would.

    You must have an arm's length contract as you would have for any other tenant. You may also have to convince the council your daughter will be treated as a normal tenant. The MIL's claim was originally rejected; my brother then met with the council and the claim was approved.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 8th Oct 16, 4:17 PM
    • 2,696 Posts
    • 2,964 Thanks
    Bluebirdman of Alcathays
    ....and be prepared to evict if she stops paying the rent. The best advice is to not mix business and family - and being a landlord is a business.
    • xylophone
    • By xylophone 8th Oct 16, 11:38 PM
    • 19,181 Posts
    • 10,894 Thanks
    xylophone
    Could you lend your daughter the money to buy the house in her name only and take a first charge on the property?

    The loan could be interest free, with repayment terms to be agreed with your solicitor.

    Your daughter could take out an insurance policy that would ensure the repayment of the loan in the event of her death - her will could leave the property to your grandchildren with a life interest/right of residence for a certain period etc to her partner.
    • planningtogo
    • By planningtogo 9th Oct 16, 5:49 AM
    • 7 Posts
    • 0 Thanks
    planningtogo
    Is there anything I could do to stop a loan being taken out against the property if it was in her name but bought with a loan from me ?
    • TrickyDicky101
    • By TrickyDicky101 9th Oct 16, 12:24 PM
    • 2,464 Posts
    • 1,619 Thanks
    TrickyDicky101
    Is there anything I could do to stop a loan being taken out against the property if it was in her name but bought with a loan from me ?
    Originally posted by planningtogo
    As Xylophone indicated you would need to take a first charge against the property. Essentially you would be providing a private mortgage to your daughter. This won't completely prevent your daughter securing further loans against the property (I believe) but it makes it far more difficult for her to do so and also safeguards your investment (before any other debts she may build up).
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

5,294Posts Today

8,799Users online

Martin's Twitter