selling house to daughter

ceebeeby

I have actually done this (I'm the daughter) and bought from parents ... however, bought outright and is main residence, and amazingly similar values.

Stamp duty is paid on the price you sell the house for ... so for example if you sell the house for £125k then there's no stamp duty to be paid, even if the house is worth double the amount. This was completely and legally checked out with our solicitors etc.

I'm not at all legally orientated, but I do know that this was what we did and we were meticulous in making sure everything was done correctly, and actually there was a thread running about a year ago asking a fairly similar question when we went about it.

EdInvestor

patm62 wrote: »

no, not avoiding anything, just to release some capital for myself rather than doing equity release, and it also gives her something for her future.

Have you considered trading down to a cheaper home to release capital?

Bossyboots

Tim_L wrote: »

Actually I wouldn't do any of this, whether part or full ownership. It's like arguing about whether it's better to cut one leg off or two. I take the point though.

I've seen a few people trying this sort of thing, and every time they create quite serious problems for themselves. A friend of mine's mother put three houses in joint names for my friend, his sister, and herself on the death of the father (each is resident in one of the three houses), presumably thinking that this was a good idea for IHT reasons. As a result all three are completely unable to move house, because there's a 40% CGT liability on two thirds of the equity, which means in turn that the actual gain in value is quite seriously reduced. To move would mean serious trading down.

Basically, get professional advice on the specifics of what is being planned. Don't construct a DIY argument, because it will come back and bite you.

We are in total agreement on this. I think it is a bad idea but if it is to be done them proper legal advice should be taken about all aspects beforehand.

aqueoushumour01

if you buy below market value, when you come to sell it again you'd have to pay quite a substantial amount in capital gains tax I should think

patm62

ok lots to think about. will get back to you!
cheers pat

patm62

not 100% sure of all the implications you're talking about but story is this. i'm sitting in house worth about £180000, morgage of £21000 still being paid by me, and at 60 it seems ludicrous that i have all this in asset and no cash. i've looked into equity release. seemed sensible to sell or do joint ownership with daughter who is currenly living and working abroad on the proviso i get the house for my lifetime. it wld at least let me leave something for her, and give her somewhere to return if she ever wanted to come back. she's very willing and we get on very well. i don't want to move as i have a luvly garden and 4 dogs. that's about it.
cheers pat

Bossyboots

You really should take some proper legal advice on your situation before comitting yourself.

I would say you are certainly better obtaining a release of equity through your daughter than one of the other companies in respect of value of return, but the other pitfalls have been set out in posts on here.

Your idea will still leave the whole property to be classed as your estate for inheritance tax so you should take some proper financial planning advice to make sure you minimise future liabilities

EdInvestor

Is it likely she would live with you if/when she comes back, Pat?

Different rules apply in that case, making this kind of arrangement a lot easier.

Bossyboots

EdInvestor wrote: »

Is it likely she would live with you if/when she comes back, Pat?

Different rules apply in that case, making this kind of arrangement a lot easier.

That would certainly make the inheritance rules simpler, but not the issue of future divorce or indebtedness potentially causing the loss of the property.