Private selling

Tom-firsttimebuyer

Hi guys,

Its very hard to find advice on the internet regarding private selling as all sites have an advertising service to sell.

My mother bought a house for me to live in and let as a student, we now wish to transfer this property to me. As I am not named on the mortgage it cannot be a simple transfer and so it must be a private sale i.e. no middle man estate agents.

Can my mother sell this property to me for the price she paid 3 years ago even if a recent valuation shows the price has gone up? Would this affect capital gains or (heaven forbid) inheritance tax?

To make a sale of this nature what do we need other than a solictor to do the registry transfer and a mortgage offer in my name for the value of the sale?

Thanks in advance.

BTW love the site. Wish I had discovered this whilst I was a student...ha!

courtjester

"private selling" - sounds to me that you are not looking for a sales service, but legal advice.

You have basically answered your own question.

You need to speak to a mortgage provider and a conveyancing solicitor is all - you don't need an estate agent or private advertising.

The value of the property compared with other properties is irrelevant - you buy the property at whichever price you agree with your mother.

You will need advice on the tax issue - again from a solicitor or accountant that specialises in inheritance and capital gains taxation as doubtless the liabilities involved will depend on the price you agree to purchase the property.

I think as regards capital gains, your mother will have exemption from the first amount - I think this is around £8,000 of gains are free, with any additional gain taxed at your mother's normal rate (possibly 22% or 40%) so it depends on whether there is that differential since the property was bought originally.

The inheritance tax issue will depend on your mother's other financial situation and how much her other assets are worth. Bear in mind that if you pay full price for the property, the money that goes to your mother will go into the pot to be hit by inheritance tax when she dies (sorry to be so blunt) before it comes back to you as inheritance, so you may need to look at acquiring the property in a different way, getting involved with a trust - you really need some solid legal advice on this from a specialist who can review all your mother's affairs.

BobProperty

courtjester wrote:

.....The value of the property compared with other properties is irrelevant - you buy the property at whichever price you agree with your mother.....

But the taxman expects it to be at market value, otherwise he'll think you are undervaluing it to avoid CGT.