Buying a house from my parents

MoneyMoney

My parents own two houses, a main house which is worth a bit but my father is wants to keep and work from. They have another smaller rental property. They want to buy a place in a small village to retire to while retaining the main house, the idea is they will sell the rental to pay for this. (my mother would sell both and fly around the world and party :-)

My question. Two of the four siblings (I am one of these) have the means to buy the rental, it is a going concern with tenants and makes a small profit. We could do the sale without estate agents etc... So it would seem efficient. Both of these siblings are looking to buy an investment of this kind.

How does this affect capital gains from my parents perspective, what is the most efficient way of doing this. Are there any pitfalls. Although inheritance would not seem to be bothered as the other siblings would have their "estate" move to the village house is there any recourse (there is a bitter one)

We figure we can get them moved to a new place easily and save them some money, while getting an investment we want, the main focus would be getting them the best deal, if we helped with capital gains and any other taxes (hate to say it but inheritance) that would be a bonus. They can't really afford to do this with out selling the bigger house but we will financially aid them.

holly_hobby

Your parents will be a liable to any gain realised on sale of the rented property. (which will be calculated at market value if sold at a discounted pch price due to family connection).

It this unit has never been utilised as their main residence, then the only permitted allowance is their annual unused CGT allowance.

If jointly held, with equal beneficial interest, the gain will be split equally for HMRC purposes.

The purchasers will be liable to stamp duty on the full amount, as there is not SDLT relief on the pch of non-primary residence properties. They also need to elect how the property will be held, either as joint tenants (with equal beneficial shares and tsf of share upon first death to suriving owner), or as tenants in common (election to hold in unequal shares, with the benefit of the deceased share being bequeathed as part of their estate).

Your parents from your post, also appear to be HNW individuals, so I would advise they speak to a financial/wealth adviser with regards to estate and IHT mitigation planning.

Hope this helps

Holly

MoneyMoney

Thanks Holly, they are only HNWI in property terms. The two of us doing better wanted to keep the rental house in the family as an income stream for them. As it is already in profit we were hoping to make this a good deal for everyone. It sounds like they are as well to sell it on the open market and we will make our own arrangements.
Well worth asking and MSE are as helpful as ever!

Thanks