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  • FIRST POST
    • Jonnyjohnson
    • By Jonnyjohnson 12th Oct 16, 1:29 PM
    • 1Posts
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    Jonnyjohnson
    Giving our house to my farther in law
    • #1
    • 12th Oct 16, 1:29 PM
    Giving our house to my farther in law 12th Oct 16 at 1:29 PM
    My wife and I are looking to get on the property market and my father-in-law is proposing a solution to help us move up the ladder faster. While the suggestion sounds good on paper, I'm concerned about any tax and legal issues.

    While searching for a house we saw a bungalow which we weren't keen on, but my father-in-law believes is a good investment with development potential.

    He is suggesting that we buy this property and live there for a year or two. During that time he would renovate his current house, which is worth more than the bungalow, and sell it. He would use the money from the sale to allow us to buy a bigger house to start a family in. At the same time we would sign-over the bungalow to my father-in-law for him to live in. His plan is to then develop the bungalow with the remaining money from the sale of his current house, and live there for a few years.

    The main question we want to consider is capital gains tax and stamp duty. From what I understand you can't just give your house to someone else. However, given that the bungalow would be our residence and only property, would we still have to pay capital gains tax? Or, would we need to pay stamp duty by simply signing over the property to me farther in law? My worry is that by effectively swapping properties we lose all the financial benefit.
    Last edited by Jonnyjohnson; 12-10-2016 at 2:13 PM.
Page 1
    • theartfullodger
    • By theartfullodger 12th Oct 16, 1:33 PM
    • 8,343 Posts
    • 10,899 Thanks
    theartfullodger
    • #2
    • 12th Oct 16, 1:33 PM
    • #2
    • 12th Oct 16, 1:33 PM
    What is a "Farther"?
    • fairy lights
    • By fairy lights 12th Oct 16, 1:40 PM
    • 6,423 Posts
    • 20,452 Thanks
    fairy lights
    • #3
    • 12th Oct 16, 1:40 PM
    • #3
    • 12th Oct 16, 1:40 PM
    That sounds like an unnecessarily complicated plan. If he wants to live in a bungalow, why doesn't he just buy it himself, and give some of the profit he makes by downsizing to you to use as a deposit?
    • David Aston
    • By David Aston 12th Oct 16, 1:42 PM
    • 561 Posts
    • 346 Thanks
    David Aston
    • #4
    • 12th Oct 16, 1:42 PM
    • #4
    • 12th Oct 16, 1:42 PM
    Must be a relative of a further!
    • agrinnall
    • By agrinnall 12th Oct 16, 1:43 PM
    • 15,600 Posts
    • 11,315 Thanks
    agrinnall
    • #5
    • 12th Oct 16, 1:43 PM
    • #5
    • 12th Oct 16, 1:43 PM
    That sounds like an unnecessarily complicated plan. If he wants to live in a bungalow, why doesn't he just buy it himself, and give some of the profit he makes by downsizing to you to use as a deposit?
    Originally posted by fairy lights
    Timing would be my guess, from what the OP has said.
    • Pixie5740
    • By Pixie5740 12th Oct 16, 1:43 PM
    • 8,846 Posts
    • 11,846 Thanks
    Pixie5740
    • #6
    • 12th Oct 16, 1:43 PM
    • #6
    • 12th Oct 16, 1:43 PM
    Generally speaking you don't pay CGT when selling your main residence. You would pay SDLT when you buy the bungalow. I think in the future when you swap houses that will be a linked transaction and so SDLT would be payable again.

    To be honest the whole thing seems needlessly complicated. Do you even want to live in the bungalow for a year or two? If your FIL wants to eventually live in the bungalow why doesn't he just buy it now and sell you his house in it's current state, that's assuming you want to live in his house.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • TrickyDicky101
    • By TrickyDicky101 12th Oct 16, 1:44 PM
    • 2,460 Posts
    • 1,617 Thanks
    TrickyDicky101
    • #7
    • 12th Oct 16, 1:44 PM
    • #7
    • 12th Oct 16, 1:44 PM
    How much are you talking (in monetary terms)?

    Sounds to me like you are selling your (unwanted) bungalow property to FiL rather than gifting it to him if he will fund house 2 for you. So SDLT will be payable by him on bungalow transfer (especially if there is a mortgage involved that needs to be redeemed on transfer).
    • G_M
    • By G_M 12th Oct 16, 1:50 PM
    • 37,004 Posts
    • 40,913 Thanks
    G_M
    • #8
    • 12th Oct 16, 1:50 PM
    • #8
    • 12th Oct 16, 1:50 PM
    Must be a relative of a further!
    Originally posted by David Aston
    and a more distant relative of a farther-in-law.
    • cjdavies
    • By cjdavies 12th Oct 16, 2:03 PM
    • 1,721 Posts
    • 1,404 Thanks
    cjdavies
    • #9
    • 12th Oct 16, 2:03 PM
    • #9
    • 12th Oct 16, 2:03 PM
    Too much hassle IMO, just buy a property you and your Wife like not your father in law. Your father in law can downsize after.
    • DaftyDuck
    • By DaftyDuck 12th Oct 16, 2:07 PM
    • 3,266 Posts
    • 6,345 Thanks
    DaftyDuck
    and a more distant relative of a farther-in-law.
    Originally posted by G_M
    It was a matter of the further-the-better-in-law, in my case.

    We eloped!


    O.P. Agree, too complex. The more money involved, and the more complex it gets, the worse outcomes become possible - probable, even. Involve family, and

    Keep things simple, and less can go wrong, and you'll sleep more, and keep your hair. Believe me, as I'm a balding insomniac!
    Last edited by DaftyDuck; 12-10-2016 at 2:10 PM.
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