Buying family home queries

JamesP

Hi, my dad has a house that has been sat empty for 2.5 years that he needs to sell before January before massive capital gains penalties kick in. I am looking to buy this house off him and he is looking to by mine off me as a Buy-to-let. We have both had the same 3 estate agents value our houses and they average as folows:

My House - Average £150k
His House - Average £190k

I have 2 questions:

1) Obviusly my dad would like to sell it to us cheaper than what he would sell it to Jo Bloggs for. We were looking to offer my dad £174,995 and let him buy ours for £145k. However, my friend has said that as this is a between family transfer and as it is right on the stamp duty threshold the Inland revenue will flag this up and investigate. He says that it would be better to sell ours to them for £140k and offer £170k on theirs. The theory being that this would not flag up with the IR.
2) What would be the best and cheapest way of completing the transfer. Can we use the same solicitor? Do you legally have to have searches carried out as we both already know the history of both the houses.

Any help would be greatly appreciated!

silvercar

I'd query whether CGT penalties ever kick in in a massive way. I'd bet if you did the calculation properly the bill would actually be small or possibly non existent. There are many allowances and just because a property has been empty for 3 years, doeasn't present you with a massive bill.

That said, it is a shame for a property to stand empty.

In amswer to your questions, stamp duty on transactions between related properties are done at market value. If you can make a case for the maorket value to be under a threshold then do so, in this market anything is possible. The fact that you are related runs the risk of your sale being flagged, whatever price you sell at. Whatever you agree, your solicitor is going to have to declare on the land tax form that you are related and state the market value. Unless you can find a dodgy solicitor you are going to have to be honest. Get an estate agent round to value for "a quick sale" and see what evidence he is prepared to put his name to.

If you can't use the same solicitor you can use different solicitors at the same practice. If you need a mortgage you will need searches, otherwise you don't.

G_M

Can we use the same solicitor?

No - it would be a conflict of interest which no solicitor would undertake.

Do you legally have to have searches carried out?

No. Either get a book on the subject and do it yourselves without a solicitor, or negotiate hard on a discounted fee as the solicitor will NOT be doing searches, dealing with a lender (or is there a mortgage?) etc.

How about actually putting it on the market, and trying to find someone willing to buy it below the stamp duty threshold? Proof for the IR!!