Quick Query regarding deposits.

giddypenguin

turkeywelder wrote: »

I'm no expert but wouldn't the Stamp duty be investigated as a result of the property being sold for lower than the valuation comes back? HMRC have up to 9 months after completion to investigate SDLT and I'd be surprised if they don't come knocking for tax evasion in this case.

SDLT starts at £125,000 so irrelevant here.

Freecall

turkeywelder wrote: »

I'm no expert but wouldn't the Stamp duty be investigated as a result of the property being sold for lower than the valuation comes back? HMRC have up to 9 months after completion to investigate SDLT and I'd be surprised if they don't come knocking for tax evasion in this case.

As others have said there are many issues with what the OP is proposing but SDLT has nothing to do with it for the following reasons :

1. The property is valued at £100k https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
   
2. Any discount will effectively be a gift https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
   
3. The OP said nothing about attempting to deceive HMRC

u4n90

Freecall wrote: »

As others have said there are many issues with what the OP is proposing but SDLT has nothing to do with it for the following reasons :

1. The property is valued at £100k https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
2. Any discount will effectively be a gift https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
3. The OP said nothing about attempting to deceive HMRC

As stated, we have no intention of deceiving the tax man, this is purely to get a foot on the property ladder, and if possible have renovation money set aside.

Thanks to an earlier post i think a gifted deposit mortgage is the way to go. Any thoughts on how i could maximise the benefit for myself?

I'm thinking of informing the bank that my father wants £80,000 for the property. The remaining £20,000 is the equity gift that secures me the mortgage with an LTV of 80%. Which means upon receipt of the £80,000, my dad takes his £75,000 leaving us with £5000 and a manageable mortgage.

Feasible? Or are there complication i have not considered?

mrginge

u4n90 wrote: »

As stated, we have no intention of deceiving the tax man, this is purely to get a foot on the property ladder, and if possible have renovation money set aside.

Thanks to an earlier post i think a gifted deposit mortgage is the way to go. Any thoughts on how i could maximise the benefit for myself?

I'm thinking of informing the bank that my father wants £80,000 for the property. The remaining £20,000 is the equity gift that secures me the mortgage with an LTV of 80%. Which means upon receipt of the £80,000, my dad takes his £75,000 leaving us with £5000 and a manageable mortgage.

Feasible? Or are there complication i have not considered?

Interesting that you have no intention of lying to the tax man, but are quite happy to lie to the mortgage lender.
Bear in mind that if you do lie to them and they find out, you risk being listed on the national hunter database. Feel free to investigate the consequences of this (if you can be bothered).
God knows why you want to complicate a straightforward concessionary purchase from family in this way.

Pixie5740

u4n90 wrote: »

i'm not sure on this point? isn't he perfectly entitled to undersell a house to anyone he likes?

and as stated above, we aren't going to declare the intention of having him pay me back, (or more accurately have him pay for the renovation work)

You don't see why not declaring the price you are actually buying the property for to the mortgage lender is not fraud? Seriously?

u4n90

Pixie5740 wrote: »

You don't see why not declaring the price you are actually buying the property for to the mortgage lender is not fraud? Seriously?

This may have been blown way out of proportion. Would it be any different if the seller asked for £90,000 which is closer to it's correct value, and then "decided" to give me a gift of £15,000? This isn't to get around the rules, since gifted deposit mortgages seem to be here to help in exactly these hand-me down situations. The only thing i'm trying to do here is maximise what i can get from the deal. either way the seller has what he wanted for the property, regardless of what he eventually gets overpaid. (and if anything all im doing is agreeing with the lender's own valuation and requesting a larger mortgage.)

3 months down the line who's to say what gift my father decides to give, and what shape that may take...

i know i'm wording it cleverly and some thoughts immediately turn to underhanded-ness, but i'm asking in terms of realistically maximising what i can get from the bank, since my dad is willing to use some of the equity in the property to secure the deposit for me.

kingstreet

You can buy a property from a close relative at undervalue using what's known as a concessionary purchase.

A few lenders will accept this.

Father will not be able to continue to live in the property after completion.

Even if this was in SDLT territory, only the actual money changing hands, the "consideration" is taken into account.

However, if this is a second property, CGT would be based on full market value.

Pixie5740

u4n90 wrote: »

i know i'm wording it cleverly and some thoughts immediately turn to underhanded-ness, but i'm asking in terms of realistically maximising what i can get from the bank, since my dad is willing to use some of the equity in the property to secure the deposit for me.

That's debatable.

No, it isn't really any different to any other buyer offering you some cash incentive to by the property, like a builder offering to pay your SDLT for example, but it still needs to be declared to the lender.

If your father wants to gift you 20% of the equity so you can get an 80% LTV mortgage that's fine. If your father wants to gift you a 25% of the equity so you only need a 75% LTV mortgage that's fine too but what you are proposing to do is poggle the figures therefore committing fraud.

ViolaLass

Pixie5740 wrote: »

That's debatable.

No, it isn't really any different to any other buyer offering you some cash incentive to by the property, like a builder offering to pay your SDLT for example, but it still needs to be declared to the lender.

If your father wants to gift you 20% of the equity so you can get an 80% LTV mortgage that's fine. If your father wants to gift you a 25% of the equity so you only need a 75% LTV mortgage that's fine too but what you are proposing to do is poggle the figures therefore committing fraud.

Not really, as the OP could get a mortgage for 75% now and then up it in 6 months to 90% (I'm ignoring issues of whether the bank would lend 90% to the OP). All they're trying to do is do it in one go.

OP, I've never used gifted deposits but as I understand it, they have to be declared. Talk to your solicitor.

Landofwood

Clearly the OP is new to this, has a hundred ideas bouncing around his/her head, and is looking for guidance. Referring to fraud in such an unconstructive manner is unhelpful.

OP, under no circumstances can you lie or attempt to deceive your mortgage lender. The consequences if caught will have a lasting affect on the rest of your life.

I suggest you search for a local mortgage broker who can advise on concessionary mortgages and can guide you so you know everything is above board.

All the best with your house purchase.