Concessionary purchase help

Minkysoftpaws

Hi, I need a bit of advice.
I am purchasing a property off my parents for 120k, it was valued at 190k, my mortgage offer was a concessionary purchase using the 70k equity as the deposit. Not once did my mums solicitor mention a gifted deposit so it was never mentioned when getting my mortgage. Now at the final point her solicitor is saying that we need to say that she gifted me the deposit and pay stamp duty on the 190k value price. When beforehand my solicitor said there would be no stamp duty due.
Also if we say this will my mortgage offer be in jeopardy as it's not been mentioned as a gift in the mortgage offer? Am I liable for stamp duty?

Please can someone clarify

Minkysoftpaws

Slow down with your answers people!

xylophone

From this http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm14316.htm
it would appear that the sale at undervalue is a gift.

There may be CGT/IHT considerations for your parents?

You say that the mortgage offer was made on a "concessionary purchase" basis - presumably the mortgage provider knew that you were buying from your parents at undervalue?


With regard to the SDLT, http://www.hmrc.gov.uk/sdlt/calculate/value.htm

According to HMRC the "chargeable consideration" is the price paid for the property - what sale price will be shown on the contract?

This is an old link but may be relevant http://www.accountingweb.co.uk/anyanswers/stamp-duty-concessionary-sale-residential-property

Your solicitor should check the situation with HMRC and the mortgage provider?

hcb42

where did your lender think you were getting the deposit from?

What was the purchase price/survey valuation?

IS CGT a factor, hence the gift rather than just a cheap sale?

There are a lot of threads relating to family gifted deposits on here some of which
I am sure will be similar situation.

kingstreet

A concessionary purchase sees the property change hands for a lower value and that value is the consideration for stamp duty purposes.

If it is under £125,001, there is no SDLT liability.

However, if this is not her main residence, she may be liable for CGT on any gain and that is calculated using the market value, not the concessionary price.

What does your mortgage broker say about this, as presumably he has placed this case with the lender on a concessionary basis?

Minkysoftpaws

Thanks for response

There may be CGT/IHT considerations for your parents?

I don't know and nor do my parents?


You say that the mortgage offer was made on a "concessionary purchase" basis - presumably the mortgage provider knew that you were buying from your parents at undervalue?

Yes he knew it was from my parents and he new it was valued at £190,000 so worked out the interest rate on that figure


According to HMRC the "chargeable consideration" is the price paid for the property - what sale price will be shown on the contract?

Is that my mortgage offer ? The contract?

Minkysoftpaws

Thanks for reply

What was the purchase price/survey valuation?

£125,000 & £190,000

IS CGT a factor, hence the gift rather than just a cheap sale?

Don't know? Can explain what might happen in laymens!?

Minkysoftpaws

Thanks kingstreet

However, if this is not her main residence, she may be liable for CGT on any gain and that is calculated using the market value, not the concessionary price.

This is where I am living now

What does your mortgage broker say about this, as presumably he has placed this case with the lender on a concessionary basis?

Yes although he worked out mortgage rate on valuation.

xylophone

https://www.gov.uk/capital-gains-tax/when-you-pay-capital-gains-tax
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

The above might help - otherwise you or your solicitor should contact HMRC for guidance?