Stamp Duty - can I avoid?

getmore4less

RJRock wrote: »

My wife and I are both recently out of work and could do with saving where we can hence the question.

Any help really appreciated.

Will you be claiming benifits, offloading £135k may fall under deprivation of assets.

CLAPTON

RJRock wrote: »

Unsure how CGT applies when I'm not selling my share gifted 15 years ago?

cgt would be potentially payable by your sisters upon the sale of the property depending upon the value when gifted and the value now (1/3 of )

you may have a cgt liability if you eventually sell


in general, parents gifting a property to their offspring and continuing to live there is a lose lose lose situation; but we don't know the full situation.

Savvy_Sue

Going back to the original question of stamp duty, I don't think there's any way of avoiding that. We've been house sharing for a while and have just bought a further portion: we managed to stay under the £250k limit, but I understand that if we buy the final portion it will be treated as a 'linked transaction' and we'll have to pay stamp duty at the relevant rate on the whole payment (if that makes sense).

OTOH, if we sell the whole house to a 3rd party, and our friend gets his remaining portion that way, we won't have to pay more stamp duty. Our friend might have CGT liability, because this won't have been his PPR, but that's a different issue.

I think you need proper advice about this, because as you're aware from this range of responses there are several issues you haven't considered.

jimmo

Well, you asked about Stamp Duty and in the space of a dozen posts you and your family clearly have potential issues with Inheritance Tax, Income Tax, Capital Gains Tax and Deprivation of Assets. However nobody has actually given you an answer about Stamp Duty.

I like to think I know a thing or two about Income Tax and Capital Gains Tax but the rest is outside of my claimed expertise but here goes.

1) Income Tax

If your father‘s payments of £25 per month into his granddaughter‘s savings accounts are to be regarded as rent they will be regarded as rent paid to the owners of the property, the parents and the parents will be liable to Income Tax on their respective rental business profits.

2) Capital Gains Tax

Your sisters will most make Capital Gains when they sell their shares of the property to you.

3) Inheritance Tax

The original gift of the property by your father was a gift with reservation but when you moved in your 1/3rd share became a Potentially Exempt Transfer and will fall out of your father’s estate for IHT purposes provided he survives 7 years from the date you moved in.

4) Deprivation of Assets

I, personally, cannot see that you paying your sisters the correct open market value for their respective interests in the property is deprivation of assets but what they are selling you is not a house with vacant possession. It is a house with a sitting tenant who may, or may not, be paying a commercial rent. The open market of that will be significantly less than a property with vacant possession.

5) Stamp Duty

I really haven’t got a clue but I have a feeling that you buying your sisters out will be linked transactions so that you will need to pay Stamp Duty on the combined purchase price.

Savvy_Sue

jimmo wrote: »

Well, you asked about Stamp Duty and in the space of a dozen posts you and your family clearly have potential issues with Inheritance Tax, Income Tax, Capital Gains Tax and Deprivation of Assets. However nobody has actually given you an answer about Stamp Duty.

I did try!!!

jimmo wrote: »

5) Stamp Duty

I really haven’t got a clue but I have a feeling that you buying your sisters out will be linked transactions so that you will need to pay Stamp Duty on the combined purchase price.

My understanding too. In fact, I'd say that Stamp Duty appears to be one of the most difficult taxes to 'avoid' because of this 'linked transactions' malarkey. The obvious thing to do would be to pay the sisters at separate times, with each transaction below the threshold, but no, that will definitely not work!

jimmo

Savvy_Sue wrote: »

I did try!!!

My understanding too. In fact, I'd say that Stamp Duty appears to be one of the most difficult taxes to 'avoid' because of this 'linked transactions' malarkey. The obvious thing to do would be to pay the sisters at separate times, with each transaction below the threshold, but no, that will definitely not work!

Sorry Sue, I started working on my contribution before your post appeared on screen but got sidetracked. Then, when I came back to post, I just posted what I had prepared without looking properly.

Savvy_Sue

jimmo wrote: »

Sorry Sue, I started working on my contribution before your post appeared on screen but got sidetracked. Then, when I came back to post, I just posted what I had prepared without looking properly.

:rotfl: been there, done that a few times! And I did check that it wasn't an obvious 'cross posting', ie both typing at the same time ...