Can I sell my house to my brother cheaply?

sosos

I'm moving city and my brother wants to buy my house (with his own money). I want to give him a great deal, 30-40% below market value. I'd like to know if the law allows this, as I'm sure HMRC don't like losing out of stamp duty and the sold house price will stand out like a sore thumb in the neighbourhood.

House is worth about £700K. The intention is that my brother is then going to move in there, with my elderly parents as lodgers paying him a lodgers' market rent.

Where are my parents currently living? In their house which is up for sale, and when sold they will gift me and my brother the cash and start the 7-year gift IHT rule!

bigadaj

Shouldn't be a problem with a gift but stamp duty will need to be paid on the actual value.

Your solicitor will be able to advise in more detail.

sosos

Apologies, I don't understand what you mean with 'not a problem with a gift'.

CLAPTON

sosos wrote: »

I'm moving city and my brother wants to buy my house (with his own money). I want to give him a great deal, 30-40% below market value. I'd like to know if the law allows this, as I'm sure HMRC don't like losing out of stamp duty and the sold house price will stand out like a sore thumb in the neighbourhood.

House is worth about £700K. The intention is that my brother is then going to move in there, with my elderly parents as lodgers paying him a lodgers' market rent.

Where are my parents currently living? In their house which is up for sale, and when sold they will gift me and my brother the cash and start the 7-year gift IHT rule!

You can sell your house to your brother for anything you like; however as HMRC will see you as being a 'connected' person then stamp duty will apply at the market value and not the sale value.

Tixy

Have your parents also considered/taken advice on whether their planned gift to you and your brother may fall under the deprivation of assets rules?

antrobus

Tixy wrote: »

Have your parents also considered/taken advice on whether their planned gift to you and your brother may fall under the deprivation of assets rules?

There are no "deprivation of assets rules" in the sense that are some set of regulations set down that can determine whether or not any particular gift is permitted or not. There is merely a risk, that if the particular "elderly parents" in question require care at sometime in the future and the Local Authority is called on to pay for some or all of it, that the Local Authority might be able to discover that certain gifts were made in the past, and therefore could argue that said gifts were made with the intention of avoiding the payment of the care fees.

Oddly enough, not taking advice on whether or not a gift was deprivation of assets, would be evidence that there was no such intention.

Tixy

antrobus wrote: »

There are no "deprivation of assets rules"

Fair point, badly worded by me for using the word rules.

Still something that is worth considering in the situation described.

k123456

hello,

I'm soon going to be buying a property from my mother for less than the market value.
An accountant told me that Stamp duty was paid on what you pay for the property NOT the market value. Although the market value is used for Capital gains tax purposes. I can't seem to find anything to the contrary on HMCR website, if this isn't the case can someone point me to where is says that you pay stamp duty on the market value

Thank you in advance

Annie1960

http://www.hmrc.gov.uk/sdlt/reliefs-exemptions/no-sdlt-return.htm

Here is a link showing properties where no SDLT is due.

If you believe your own circumstances are not covered on the HMRC website, then it's probably best to give them a ring to discuss the situation before you act, so you know what the position will be.

It can be difficult to get through to HMRC on the phone, but it is often much easier if you ring them when they first open, which I recall is about 8am.

SuzieSue

k123456 wrote: »

hello,

An accountant told me that Stamp duty was paid on what you pay for the property NOT the market value.

Thank you in advance

This is correct. You only pay SD on the amount paid for the property and not the market value.

If a property is considered to have been sold at undervalue then the Land Registry will usually not put the sales price on its price paid listings.