Gift money or gift home - IHT and CGT advice sought

someadvicereq

I recently negotiated with my mortgage provider to accept a shortfall on my mortgage but I was required to sell the house to do so.

To speed up the process, my sole parent (remarried) has purchased my house and I have paid the shortfall to the mortgage company. The mortgage company were happy with this arrangment.

So now my parent owns my house as a second home (deeds have beentransferred) and I am living in it mortgage free (:T).

Now my parent has decided that they:

a) Want to gift the house back to me, so I can sell it and move home.

b) Sell the house themselves and give me the lump sum from the house sale as a gift.


My parent thinks option b might be better since there would be less solicitors fees (from not having to transfer deeds to me and pay land registry). Any issue with transferring the deeds back to me within weeks of selling?

But I'm not sure if either way is more appropriate when it comes to CGT and IHT.

My parent bought the house for £80,000. It may sell for £90,000 max. I don't think either they or I will be liable for CGT as its under the threshold?

I am also certain my parents entire estate is less then £325,000.

Can anyone please advise on which scenario is preferred?

Thanks

CLAPTON

a bit late now but why didn't they simply pay off your mortgage?

tax wise it seems to make no difference
cgt would be zero (assuming gain after expenses in less than 10,900)
or IHT if the estate is less than 325,000 anyway.

if you don't plan to live there then simplest would be just sell it and give you the money for your next purchase.

someadvicereq

Thanks for the reply.

The house was in quite a lot of negative equity. My mortgage company said they would accept a shortfall - but I was required to sell the house.

My parent bought it to speed up the process as it could have been months on the market.

Now they want to give it back (generous I know!).

If my parent was to sell the house:
- on completion, their solicitor would get a cheque
- assuming I am buying a house which is completing on the same day, my parent, or her solicitor would need to somehow give me the money so that I can give it to my solicitor, which then goes to the solicitor from whom I am buying a house
- would it be therefore less complicated to gift the house to me. Since when I sell the house then cheque will go to my solicitor and there won't be the delay of it coming from my parent?

Hopw that last part makes sense!

CLAPTON

someadvicereq wrote: »

Thanks for the reply.

The house was in quite a lot of negative equity. My mortgage company said they would accept a shortfall - but I was required to sell the house.

My parent bought it to speed up the process as it could have been months on the market.

Now they want to give it back (generous I know!).

If my parent was to sell the house:
- on completion, their solicitor would get a cheque
- assuming I am buying a house which is completing on the same day, my parent, or her solicitor would need to somehow give me the money so that I can give it to my solicitor, which then goes to the solicitor from whom I am buying a house
- would it be therefore less complicated to gift the house to me. Since when I sell the house then cheque will go to my solicitor and there won't be the delay of it coming from my parent?

Hopw that last part makes sense!

the solicitor gets a CHAPS payment on completion day

whether a solicitor could work for your parent for their sale and for you for the purchse I don't know but if they could that would be more or less what happens when you sell/buy yourself.

maybe some-one on the board knows or ask your parents' solitor

someadvicereq

Thanks - I will check and see if my parents solicitor can also be used my me to buy a different home, and if they would be willing to transfer the money to my solicitor!