Buying a house of my parents for under market value

ktandpete

Hi again Thrugelmir & p00hsticks,

I thought stamp duty was only due on properties over £175,000, so even if we had to pay the stamp duty on the actual value, that would still be nothing, right?

Do you think a solicitor be prepared to transfer it market value even if we only pay the lower amount? Is it legal?

Thanks for the continued advice, really appreciated

Thrugelmir

ktandpete wrote: »

Hi again Thrugelmir & p00hsticks,

I thought stamp duty was only due on properties over £175,000, so even if we had to pay the stamp duty on the actual value, that would still be nothing, right?

Do you think a solicitor be prepared to transfer it market value even if we only pay the lower amount? Is it legal?

Thanks for the continued advice, really appreciated

You'll need a valuation to get your mortgage. As if you say the property is worth £170k then no stamp duty would be payable.

Speak to you conveyancing solicitor regarding the transfer/gift of equity in the house to yourselves.

You may well find your OH's credit score problamatic in obtaining a mortgage in the current market.

AMILLIONDOLLARS

Just to clarify a point made. Say a house is valued at 300k, and by some miracle a person is able to buy it for £150k, are you saying that this person has to pay stamp duty on the £300k valuation figure?

AMD

Thrugelmir

AMILLIONDOLLARS wrote: »

Just to clarify a point made. Say a house is valued at 300k, and by some miracle a person is able to buy it for £150k, are you saying that this person has to pay stamp duty on the £300k valuation figure?

AMD

If this was the case one would suspect that the transaction is "iffy" in some manner. Tax evasion , money laundering etc.

p00hsticks

AMILLIONDOLLARS wrote: »

Just to clarify a point made. Say a house is valued at 300k, and by some miracle a person is able to buy it for £150k, are you saying that this person has to pay stamp duty on the £300k valuation figure?

AMD

I think it depends - if the buyer and the seller are completely unconnected and the purchase is the only transaction between them, then the value of the house in your example could legitimately be seen to be £150,000, as that's whats being paid for it, and that's what SDLT would be paid on.

But that's not the case described in this thread. The buyer is 'connected' to the seller - they're related - and there are other 'connected' transactions between them (the poster is paying the interest on a mortgage on their parents house, which in turn was used as a deposit for theirs).

In those circumstances, my understanding is that HMRC won't necessarily accept that the sale price is the true market value that should be used for stamp duty, Capital Gains Tax and/or inheritance tax considerations. But I'm not an expert so I can't say for sure - I think you'd have to ask a solicitor for advice.

p00hsticks

ktandpete wrote: »

Hi again Thrugelmir & p00hsticks,

I thought stamp duty was only due on properties over £175,000, so even if we had to pay the stamp duty on the actual value, that would still be nothing, right?

Yes, providing you get it all done before 31st December - the exemption of SDLT on properties up to £175,000 was only supposed to be a temporary measure up to then.