Gift of house, fab but legal? Help!

Somerset-saver

I recently found my birth parents after being adopted at a young age. They live in Germany as German nationals, sadly my father is dying and both want to give me a house they have in UK that they have not lived in. Now as I was adopted they cannot use inheritance law I believe so a brother has suggested I buy it at a really low price (it has not been lived in for a decade and needs work) and then she will 'give ' me the money back. Do not doubt them, just want to do it all legally so....is a silly low price ok or dodging tax man? Have no plan to sell house once renovated, will let it out as holiday home and for use of German family.

TrixA

I'm sure someone more expert will be along soon, but I believe that yes, it's legal, but any taxes due (e.g stamp duty) would be assessed at the actual market rate, not the amount you paid.

xylophone

Your birth mother should check with a German solicitor what ( if any) tax would apply if she and her husband gifted you their UK property before your birth father's death?

Re sale http://www.blickrothenberg.com/getmedia/13f583d4-7047-459a-bc12-49311d08d15b/CGT.pdf.aspx might be relevant.

anselld

There is no legal reason why your father cannot either gift the property or leave it to you in his will. Obviously there will be inheritance tax implications under whatever law applies in Germany which you are unlikely to find a legal way to evade.

getmore4less

TrixA wrote: »

I'm sure someone more expert will be along soon, but I believe that yes, it's legal, but any taxes due (e.g stamp duty) would be assessed at the actual market rate, not the amount you paid.

That's the one tax that is based on the consideration.

there may be a CGT impact but it requires knowledge of both the German and UK issues around gifting and inheritance.

anselld

TrixA wrote: »

I'm sure someone more expert will be along soon, but I believe that yes, it's legal, but any taxes due (e.g stamp duty) would be assessed at the actual market rate, not the amount you paid.

If it is genuinely a gift there is no SDLT

Somerset-saver

Thank you all!
The property is 30% owned by mother 70% father and he is in no state to declare his wishes officially. It will convert to her ownership and I do not wish to rush anything at this sad time. I think the assets are large enough to touch the generous German inheritance tax levels for both husband and wife hence the 'sale'

Bluebirdman_of_Alcathays

You need a solicitor with experience of international property transactions - I know of a good one in the SW but they're certainly not cheap.

G_M

Has your father made a will?
If not, is in mentally capable of doing so?
this is the simplest solution.

Germany may have other taxes/regulations, but UK-wise:

* Inheritance Tax. If your father and/or mother's Estate exceeds the limits (£325K each?) then IT will be payable. This applies both to inheritance on his death and any gifts in the years up to his death (see taper relief). Of course, Germany may be different, and it depends whether UK or German laws of (in)testacy will apply.

* Capital Gains Tax. As your parents have not lived in the property (was it let out?) CGT will be payable if they sell or give it away during their lifetime. This will not apply if it passes to you through inheritance on death

If your father is "in no state to declare his wishes officially." how is he going to be able to sell it to you? At whatever price? Either

a) he is mentally capable - in which case why not simply write a will leaving you the property? OR

b) he is mentally incapable, but his wife/brother/someone has Power Of Attorney. His POA could then sign the sale documents for him, but this raises issues: a POA has a legal duty to act in the best interests of the person they act for, and it could be argued that selling the property below market value is not in his best interests! The POA could be in trouble, especially is someone else in the family objected.... OR

c) he is mentally incapable, and no one has Power Of Attorney. In which case selling will be difficult.......

getmore4less

Somerset-saver wrote: »

Thank you all!
The property is 30% owned by mother 70% father and he is in no state to declare his wishes officially. It will convert to her ownership and I do not wish to rush anything at this sad time. I think the assets are large enough to touch the generous German inheritance tax levels for both husband and wife hence the 'sale'

If it was a UK situation that would not work it would be a gift at full/part value and be a PET.