Can I sell my house for a lot less than it's worth?

PParka

Hi,
I'm about to move and my brother has said he would like to buy my house. It's valued at about £230k

Can I sell it to him for a lot less i.e £175k to avoid stamp duty?

If he decided to then 'gift me' some money i.e. another £50k, is this legal?

It seems OK to do, but I'm sure you guys know better than me.

Thanks

clutton_2

in a word no.

if you have am mortgage you have to pay off the mortgage - either at the point of sale or over future years - but with interest being added onto the original loan every day

if you sell significantly less than market value the solicitor will have to inform the Tax man and you may be investigated.

seven-day-weekend

I think here you have two potential crimes - tax evasion and money laundering.

Although I hasten to add I am no expert in either!

westv

Why not just ask your brother to buy it for £175,00 and be done with it?

PParka

Thanks for the advice.
For the sake of avoiding a couple of grand in stamp duty, I won't risk it.

Like they say "If it sounds too good to be true. It probably is"

silvercar

Sell to your brother for what you like. The catch is that stamp duty between related parties is calculated on market values.

whitfreak

If its got a morgage on it then you have to get their agreement on the sale. Otherwise you can sell at any price. But as silvercar says stamp duty is on market values rather than prices when its in the family. So theres no real benefit.

hundredk

whitfreak wrote: »

If its got a morgage on it then you have to get their agreement on the sale.

Really:question: Isn't the lender only interested in having enough to pay them back?

whitfreak wrote: »

Otherwise you can sell at any price. But as silvercar says stamp duty is on market values rather than prices when its in the family.

How and where does this get flagged up? Does it work in reverse ie if you sold for more than its worth would market value determine stamp duty?

silvercar

Really Isn't the lender only interested in having enough to pay them back?

You can't pass the mortgage to someone else. The new owner needs to take out their own mortgage.

How and where does this get flagged up? Does it work in reverse ie if you sold for more than its worth would market value determine stamp duty?

Gets flagged on the form that you use to register ownership and pay stamp duty. Why would anyone pay more than something is worth, particularly when gifts are tax free in this country?

prowla

Actually, it is an interesting question - who says you have to sell a house at the perceived market value?
Evidently, if you sold it and then he slipped you the difference in used fivers in a brown envelope, then it would be fraud.
But if you are willing to genuinely sell at a loss then what is the issue.
As noted, the mortgage provider only needs to get the money back that you owe them.

prowla

Oh, and didn't one of the MPs recently sell their house to their daughter at a loss?