Selling half of my house to my son

dizzyS

If my son paid me (cash) half the value of my property to buy a half share, would I have to pay tax on this as 'Income'? (We both live in the property and have done all our lives).

Are there any other implications?

Pixie5740

Do you have a mortgage?

If the property is mortgage free and your son pays you cash (no mortgage) equivalent to half the value of the property then I think you can transfer ownership from just your name to yours and his either as joint tenants or tenants in common. The money from your son is not taxable income.

gingercordial

Your son may have to pay stamp duty if the value of the share he is buying is above the 0% band (£125k).

You have sold half of your house which is subject to capital gains tax, but since this is the house you live in it should be exempt from tax.

If he is paying half of the true market value then inheritance tax shouldn't be a problem as there is no "gift".

Frugal_Foxy

I've spoken to the Inland Revenue and they say that a Transaction Tax would apply - 2% for up to £125k and 5% above that !!! They don't care who pays it - it is just 'due'.

Very interesting that no-one seems to know about this.

I spoke to Land Reg and no fee is payable for transferring half the house to my son.

Pixie5740

Frugal_Foxy wrote: »

I've spoken to the Inland Revenue and they say that a Transaction Tax would apply - 2% for up to £125k and 5% above that !!! They don't care who pays it - it is just 'due'.

Very interesting that no-one seems to know about this.

I spoke to Land Reg and no fee is payable for transferring half the house to my son.

Transaction Tax? Are you referring to the Land & Buildings Transaction Tax in Scotland?

TrickyDicky101

Frugal_Foxy wrote: »

Very interesting that no-one seems to know about this.

.

How do you figure that?

princeofpounds

It sounds like the OP is talking about the Scottish version of Stamp Duty (SDLT) - Land and Buildings Transaction Tax (LBTT). No idea why they needed to change the name. But the numbers and interpretation they have are wrong if so:


https://www.revenue.scot/land-buildings-transaction-tax/guidance/calculating-tax-rates-and-bands

Frugal_Foxy

I spoke to the Inland Rev and clearly stated that I live in England and they clearly said that the Transaction Tax would apply.

princeofpounds

Then I honestly suggest you speak to the inland revenue again, and this time take some details. Because the advice they have given to you sounds confused, and your description of the advice you have received seems confused. Take some details - asking them what the name of the tax is might be a good start.


Wales is considering changing the SDLT to a TT at some stage (the difference seems rather academic to me, but there you go) but that's a post-2018 thing. Possible some similar change in terminology has got someone confused? Or perhaps talking about selling half shares has got someone thinking you are employing a tax avoidance scheme of some kind?

davidmcn

Frugal_Foxy wrote: »

I spoke to the Inland Rev and clearly stated that I live in England and they clearly said that the Transaction Tax would apply.

Given that the Inland Revenue hasn't existed for over a decade, maybe you're confused about the other bit too.

xylophone

https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

As far as I can see, SDLT would be due on the "chargeable consideration" (what the son will pay for a half share of full market value) only if it is more than the current SDLT threshold for the property type?