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Being given a house
ali_hire
Posts: 59 Forumite
Apologies if this is in the wrong section, it seemed like the best one to put it in.
My father has a flat he no longer lives in and no longer needs. It’s mortgage free but only worth around £120k.
I’ve made an agreement with him to loan me £100k and the flat will fund this. We have two options;
1. He gives me the flat, I sell it, I give him back whatever we sell it for over £100k.
2. He sells the flat and gives me £100k.
Are there any financial or tax benefits to either option or will it make no difference which way we do it?
My father has a flat he no longer lives in and no longer needs. It’s mortgage free but only worth around £120k.
I’ve made an agreement with him to loan me £100k and the flat will fund this. We have two options;
1. He gives me the flat, I sell it, I give him back whatever we sell it for over £100k.
2. He sells the flat and gives me £100k.
Are there any financial or tax benefits to either option or will it make no difference which way we do it?
0
Comments
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if the objective is that you end up with £100k in cash then it is pointless spending money on fees associated with transferring it to your name if neither you or your father are actually going to keep the property. Father should sell his flat and give (loan?) you the money
depending on how long ago your father moved out he (not you) will be liable for CGT whether he sells it himself or gives it to you and you sell it. Of course if you delay selling it for a long time yourself, you will possibly also then be liable for CGT
as for IHT since you refer to it as a loan then the outstanding value of that laon remains part of his estate until you repay the full 100k0 -
Google "deprivation of assets" or search this forum, it comes up on a daily basis.
If your father needs to rely on state benefits or go into a care home he may be treated as if he still has the £100k. There is no limit as to how far back a council can go when it comes to DoA considerations.Thinking critically since 1996....0 -
You need professional advice.Changing the world, one sarcastic comment at a time.0
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My father inherited the flat from his mother and has lived there until very recently (around a month ago) as his principle residence.
He's now living in a house which he was letting and the flat is empty.
He has other assets to the tune of around £500k as well as private pensions and private medical insurance which mean we shouldn't have to worry about state benefits or care.0 -
OK so he will be exempt from CGT under the "final 18 months ownership" ruleMy father inherited the flat from his mother and has lived there until very recently (around a month ago) as his principle residence.
still leaves him and you with pointless legal fees in transferring ownership to you just so he can realise 100k in cash. Much cheaper just for him to sell up and give the money to you
before you ask there is no tax payable by the person receiving cash as a gift, and the tax implication for the donor are those relating to IHT only - ie the 7 year rule in this case0 -
As advised above.
he sells the flat. he loans you £100K and keeps the balance for his next holiday.
You owe him £100K (plus any interest agreed).
If he dies, you owe his estate £100K (plus any interest agreed).0 -
Are you offering compensation if your advice is incorrect and they get an unexpected bill from HMRC?your signature says it all. Why do you think OP needs professional advice to decide between who sells what so as to end up with 100k in cash to give to the son?
Changing the world, one sarcastic comment at a time.0 -
I see no value in your only contribution being to tell someone to get professional advice - you may as well post that as the only answer to every thread on the board because following your logic that is the only indemnified answer that can be given by anyone to anyoneAre you offering compensation if your advice is incorrect and they get an unexpected bill from HMRC?
however, it is not difficult to see the difference between simple cases and those where there is uncertainty and/or complexity. In this case (on the info presented
) the tax consequences are as stated. It is a loan from father to son. It has IHT consequences but no CGT or income tax consequences (unless, iro income tax for the father, he charges his son interest on the "loan")
even if it were an outright gift rather than a loan the tax consequences would be the same0
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