any pitfalls?

Cariad_3

If parent and adult daughter (no other siblings) wish to exchange a house , just a straight exchange (through solicitors & building society) could you advise which is the preferred financial way to do it?

Are there any pitfalls to be aware of?

BobProperty

Cariad wrote:

...Are there any pitfalls to be aware of?

The taxman.
You could be seen as avoiding CGT or IHT. All disposals are taken to be at market value, anything else and the taxman gets worried he isn't getting his cut.

Cariad_3

o.k. so which is the best way forward keeping the tax man happy but doing it in the best financial way. (by the way I'm asking for a friend, not me. I wish!!)

cannyscot_2

I think the only serious hitch to this arrangement is if either party has a mortgage on either property. The mortage would have to be redeemed in the normal fashion and another taken out etc etc .

tax wise stamp duty would be payable as normal -and technically IR could query market value but an estate agents valuation would probably give you a fair indication of market value and you would have to budget for stamp duty based on these values. (you used to pay stamp duty on just the balance of exchange but this loophole was closed -pity)

Legal fees can be slightly reduced in this case as you can get away I believe with one contract rather than two seperate ones.

BobProperty

Cariad wrote:

o.k. so which is the best way forward keeping the tax man happy but doing it in the best financial way. (by the way I'm asking for a friend, not me. I wish!!)

I don't know what the best way is, as it no doubt depends on their personal circumstances. It looks like (from the taxman point of view) that the parent has effectively given the child £100,000. A transfer which may have IHT implications. Have you asked on the tax forum?