Can I sell a property I own to my son for £25,000.00

Seafairy

Can anyone advise - My husband and I have inherited a property which is mortgage free, probably valued at £250000.00. We would like to sell this to our son for £25,000.00. Is this ok to do, and does anyone know of what taxes/ charges would be involved. - Any information would be great - thank you

TrickyDicky101

Yes you can do this.

It will count as a disposal at whatever the market value is (so 250k) against you and your husband (assuming you own it jointly). This may result in a chargeable gain depending on what the value of the property was when you inherited it (if very recently, the values are likely to be very close and hence it is unlikely you will need to pay any CGT).

Your son will not have to pay Stamp Duty on the purchase as it is below the thresholds.

warwicktiger

Why not have a look at a deed of variation of the will? It might be possible that rather than you inherit it could pass directly to your son.

sammyjammy

I thought you had to pay stamp duty based on the value of the house if you buy at a preferential price.

martinsurrey

sammyjammy wrote: »

I thought you had to pay stamp duty based on the value of the house if you buy at a preferential price.

no.

chargable consideration is all that matters, so the £25k cash (assuming there are no linked transctions)

Dave_the_Ginger_Cat

Two other things occur to me to consider

1) Insolvency
Should either of you become insolvent, some of the difference could be claimed by a future receiver

see http://www.trust-deeds.org.uk/what-is-a-transaction-at-an-undervalue/

2) IHT
There may be Inheritance tax implications should either of you not survive 7 years after the transfer

see http://www.silverman-sherliker.co.uk/newswires/11feb-gifts-to-children.htm

Sorry it's gloomy ones, but it's best to consider all possibilities

martinsurrey

Dave_the_Ginger_Cat wrote: »

Two other things occur to me to consider

1) Insolvency
Should either of you become insolvent, some of the difference could be claimed by a future receiver

see http://www.trust-deeds.org.uk/what-is-a-transaction-at-an-undervalue/

2) IHT
There may be Inheritance tax implications should either of you not survive 7 years after the transfer

see http://www.silverman-sherliker.co.uk/newswires/11feb-gifts-to-children.htm

Sorry it's gloomy ones, but it's best to consider all possibilities

Depending on when the property was inherited a deed of variation eliminates all of these.

http://www.makeawill.co.uk/page-deed-of-variation-file-79.html

You could vary the will so that your son inherits 90% of the house (£225k) and then you sell him your 10% for £25k (at market value) upon execution of the deed.

This gets around both stamp duty, inheritance tax, insolvency, deprivation of assets, etc.

It could all be done by a decent solicitor as a package.

newsgroup_monkey

Dave_the_Ginger_Cat wrote: »

Two other things occur to me to consider

1) Insolvency
Should either of you become insolvent, some of the difference could be claimed by a future receiver

see http://www.trust-deeds.org.uk/what-is-a-transaction-at-an-undervalue/

Only if the OP was heavily in debt and it was proven that they did it to "hide" the asset. If the OP is in debt then surely they would want more than £25k?

2) IHT
There may be Inheritance tax implications should either of you not survive 7 years after the transfer

see http://www.silverman-sherliker.co.uk/newswires/11feb-gifts-to-children.htm

Sorry it's gloomy ones, but it's best to consider all possibilities

Indeed.

I don't quite understand why it isn't easier just to gift them your son the house. Then if your son chooses to gift you the money, then so be it.

As someone else said, deed of variation is the way to do this isn't it?

Yorkie1

The only other issue to consider is deprivation of assets - if you need to claim means-tested benefits or care, then you may be treated as if you still owned the value of the property if the council decides you deliberately gave it away to obtain the benefits or avoid paying for the care.