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Selling to Parents for over market value
jtotheb
Posts: 137 Forumite
I'm after some advice on what is a slightly different scenario than most of the threads I've seen.
My In-Laws want to buy our house off us. They're cash rich and are wondering whether this is an opportunity for some financial planning to pass on some cash to their daughter. I can't seem to get it straight in my head!
If they bought the house for over market value, is there anything to stop that? Is it a tax efficient way of gifting money to their daughter?
My In-Laws want to buy our house off us. They're cash rich and are wondering whether this is an opportunity for some financial planning to pass on some cash to their daughter. I can't seem to get it straight in my head!
If they bought the house for over market value, is there anything to stop that? Is it a tax efficient way of gifting money to their daughter?
0
Comments
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Of course it is. That's why everyone is at it......
I hear Philip Green is buying his daughters pad for a gazillion quid...0 -
Err, OK. It's an honest question. Can you expand on your response please?0
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If they're cash rich they should be taking qualified advice on tax efficiency anyway. Like right now.0
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1) SDLT. The buyer will pay extra tax.
2) Inheritance Tax. The amount 'above market value' is effectively (and legally) a gift. So if the donor dies within 7 years it would fall within the Estate for IHT purposes
Can't think of any other relevant tax.
But as others have said, they should look at their finances in total and get tax and inheritance advice on
* gifting money
* writing their wills
* creating trusts
* considering skipping a generation 9donatingto grandchildren - directly of via a trust
* etc0 -
They can pay what they want for it, but what you've outlined is anything but tax efficient.
If they are likely to live for another seven years, then just gifting you money now is one way of reducing IHT. But it's important to seek both legal and tax advice, and some mention ought to be made in the will of who will be responsible for any IHT in the event they die before the transfer becomes exempt. Otherwise, it's likely HMRC will come after the recipient rather than the estate."Real knowledge is to know the extent of one's ignorance" - Confucius0 -
Where will you live?
Wouldn't it be easier, and more tax efficient, if they just gift her whatever the difference between the value of your house and the amount they were wiling to pay for it?0
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