Sell property to daughter below valuation

Helpful_Dad

I own a property that I wish to sell to my daughter at a price below a surveyor's valuation. If the valuation is £150000 and I sell it to my daughter for £100000, would a bank take the £50000 discount as a "deposit" if she applied for a mortgage?

ACG

Some would.

If your doing the research yourself, your looking for family gifted deposits. Otherwise a broker will be able to help with this.

amnblog

You need to be guided to the right lender on this Dad.

It should work exactly as you suggest.

Thrugelmir

Is the transaction priced to avoid or reduce a tax liability?

xylophone

I own a property that I wish to sell to my daughter

Not your principal private residence?
http://www.hmrc.gov.uk/helpsheets/hs295.pdf

Is anything here relevant?

amnblog

My understanding is tht the sale price will be £150k and your daughter will raise £100k mortgage and be gifted the balance by you.

If so you can ignore the last two posts.

kingstreet

Concessionary purchase, family subsidised purchase, family purchase at undervalue...

Different lenders have different names for this.

Some lenders will only allow the "discount" to be 20% of the value, so if you sell it to her for a net £100,000 they will only accept a value of £125,000.

Thrugelmir

amnblog wrote: »

My understanding is tht the sale price will be £150k and your daughter will raise £100k mortgage and be gifted the balance by you.

If so you can ignore the last two posts.

There's still a possibility that a tax liability will be crystallised.

holly_hobby

Thrugelmir wrote: »

There's still a possibility that a tax liability will be crystallised.

If referring to CGT - if there is any exposure os of PRR exemptions, its based on the market value, not actual sale price (as a connected sale).

If referring to IHT - the effective discount is treated as a PET - only relevant if the Donor dies within 7 yrs of donation and their net estate (inc non-exempt transfers/gifts) exceeds nil rate exemption (inc any decd spousal tsf).

If referring to SDLT - its based on the consideration (ie sale price), which if under 125k is nil.

Kings. has explained the basis of family discounted pch, pretty common, but not all lenders will work off market value (MV) instead of pch price, and for those that do work off MV be aware of those lenders that apply a ceiling to the discount ie 20% Kings has mentioned.

Best advice - engage an experienced broker.

Hope this helps

Holly

kingstreet

Aye. CGT based on value, stamp duty based on actual consideration paid.

Helpful_Dad

Thanks for all the comments - looks like it shouldn't be too difficult.