Selling property to a family member

rms1

We want to sell our property to our son at less than the market price. It is our intention to move into another house that he already owns. The house has been valued at £350k but we still owe approx £170k so that is the amount that we will sell it for so we can be mortgage free. He will take out a buy to let mortgage to buy it from us and rent the property out.

My question is about stamp duty. Would the stamp duty payable be on the 350 or the 170.

Are there any other implications that we need to consider?

DTDfanBoy

Stamp duty is payable at the agreed price, so would be £900

There are lots of implications, no 1 being you've just effectively given away £180,000.

rms1

DTDfanBoy wrote: »

Stamp duty is payable at the agreed price, so would be £900

There are lots of implications, no 1 being you've just effectively given away £180,000.

We trust our son

DTDfanBoy

rms1 wrote: »

We trust our son

Well that's nice to know but it doesn't change the fact that you've just given away £180,000 which could have future implications for yourselves

rms1

DTDfanBoy wrote: »

Well that's nice to know but it doesn't change the fact that you've just given away £180,000 which could have future implications for yourselves

Such as please

pmlindyloo

rms1 wrote: »

Such as please

Maybe they are thinking of deprivation of capital if one of you needs to go into a care home.

I am sure you do trust your son. Has he given you one of his properties in part exchange or is he charging you rent?

Just curious, a large sum of money to give away

rms1

pmlindyloo wrote: »

Maybe they are thinking of deprivation of capital if one of you needs to go into a care home.

I am sure you do trust your son. Has he given you one of his properties in part exchange or is he charging you rent?

Just curious, a large sum of money to give away

We will be living in the property rent free.

booksurr

rms1 wrote: »

We will be living in the property rent free.

in which case you need to be careful you do not fall foul of the Pre Owned Asset Tax rule

you are selling your property to your son at significantly below market value
you will then reside rent free in a property owned by your son

as such you have passed part of your wealth down the generations to your son yet you continue to receive a benefit in kind from that wealth since you live rent free

under the POAT rules if the rental value of the property in which you reside is more than £5,000 pa you (not your son) will be charged income tax on the benefit in kind you receive from not paying any rent on what is effectively still your money since it is invested in a property your son owns but you live in

very complex area of tax law requiring professional advice to avoid being bitten by HMRC

Annisele

I can think of other tax problems (as I suspect can booksurr, but it's hard to give an exhaustive list).

Does your son have a mortgage on the property? If he does, that might bring in another set of issues quite apart from the giving away £180k.

xylophone

Were you not moving into your son's property on a rent free basis, the sale at undervalue would count as a gift for IHT purposes - there would be the possibility of a PET.

In this case, the sale at undervalue would not be a gift but a sale in consideration of a benefit or at best, a "gift with reservation" so could not be a PET.

This could have IHT implications.

Suppose your son became bankrupt or divorced? You could be left homeless.

Best to take expert professional advice?

Missko

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