Buying / Being gifted a house

kevdaley

Hi everyone,

We've been looking to purchase a flat and have been offered one in the area we want to settle by a relative, at the minute it's a shell of an old shop and we're being offered it for £100,000 (we were going to pay the relative £1000 per month until the £100,000 was paid off), we'll just have to turn it into what we like.

We've had the property valued as it is, and been told its worth around £100,000, then once completed as a 3 or 4 bed flat it will be worth around the £165,000 - 180,000 depending on the finish..

What I need to know is, will I have to pay any inheritance tax on this property if they just put the deeds in our name, or if we did it all officially and by selling us the property, would any of us need to pay any taxes?

Thanks

G_M

Inheritance tax? Who has died?

IT is paid by the estate of the deceased, so unless you die, you will not have to pay IT.

If the property used to belong to a relative who has now died, then IT will have to be paid if their total Estate is valued over the allowance threshold (£325K), but it will be paid by the Executers out of the Estate, not you.

If you make the property your main residence, you will also not have to pay Capital Gains Tax.

As the property is valued at £100K, you will not have to pay Stamp Duty on the purchase either.

kevdaley

Yeah, sorry, meant capital gains tax, no-one has died,

So, what we're saying is they can just "gift" the flat and put the deeds into our name, and I won't have to pay anything else other than the £1000 per month to them? If that's right, that's exactly what I wanted to hear..

Will they have to pay anything at all, or could they just keep the £1000 per month we give them (as it will be paid in cash).. We're not doing anything illegal/avoiding any taxes are we?

G_M

They are being very trusting. What if you stop paying the £1K per month?

However, that is a matter between you.

There is no reason they cannot give you the property (assuming there is no mortgage on it!).

Whether they want a Charge on the property (like a motgage) so that they have security if you stop paying is up to them.

At the least, I would advise an agreement between yourselves as to how much you will pay them, for how long. Ad what would happen if you sold the property. Or lost your job and needed to reduce the payments etc et. Consider every future possible scenario and discuss/agree what woul happen.

But tax? No.

kevdaley

We're getting something written up, an agreement done by a solicitor, so hopefully it should be fine, it's to protect both parties really..

Thanks very much for your help..

Thrugelmir

Is the property a shop or a residential flat?

kevdaley

hi, sorry for the late reply, it's a shop at the minute, but has planning permission to change to a flat..