Buying a house from in-laws - Capital Gains Tax

jimmo

holly_hobby wrote: »

You/Dad/Accountant really needs to check with HMRC BEFORE you all dive in

Nice idea but I’m not too sure you would find anybody to run it past at HMRC.

HMRC are willing to look at some proposed transactions but only in very limited circumstances and I can’t see that this particular problem fit’s the bill.

http://www.hmrc.gov.uk/cap/


The basic principle is that HMRC will advise on how tax legislation applies but the question here is whether the exercise of buying a property, refurbishing and then selling constitutes an adventure in the nature of trade or something else.

Trade is not defined in tax legislation and decisions are based on case law.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM20051.htm


Therefore, as far as I can tell, HMRC will not give a definitive answer.

As things stand it appears that the in-laws will purchase the property, pay for the refurbishment and then sell to the OP at cost and realise no profit. If that is an adventure in the nature of trade where is the adventure or risk?

Where is the fiscal purpose?

http://www.hmrc.gov.uk/manuals/bimmanual/BIM20105.htm


On that basis if HMRC are prepared to comment, pre-transaction, they will almost certainly go for Capital Gains.

lookingforthelight

Hi,

just read your original question.

Is it possible to add your names to the mortgage and land registry after 6 months. have it in joint names for next 6 months then have your in laws names removed from mortgage after another 6 months.

You could then remortgage to release extra cash to repay in laws their cash outlay.