Gifting property

Glenn_pringle

Hi all, I have a question and hope you can help me with your expert advice.

5 years ago my wife and I found a house at a great bargain price but we couldn't get a mortgage on it as it had wood worm ect.

My inlaws paid for the house in cash by remortgaging there home and we have been paying their mortgage since. We now want the house to be in our name but we are unsure what the best way to do this.

Do we get gifted the house and then remortgage it in six months and pay off their mortgage.
Or do we buy the house off them at below market value and use the below the market value as a gifted deposit. Is there better options that won't effect my inlaws tax or anything like that.

All advice welcome.

Thanks

anselld

With hindsight they should have lent you the cash to buy in your own name.

Already they have probably failed to declare taxable income since if you pay them the full value of a repayment mortgage their valid expense is only the interest element.

On transfer SDLT will be payable by you on the consideration, i.e. the amount of outstanding mortgage you pay off for them.

They will be liable for CGT on the full market value increase since it has not been their main residence at any time.

ShoesAreDamnExpensive

I second everything Anseldd says. They should have declared the mortgage payments as rent received. If they want to gift the property to you now it is deemed a transfer at full market value as you are connected persons so CGT payable on any increase in value. SDLT looks at the consideration paid. Where the transfer is a gift there is no actual consideration but you also have to include any debts taken on. So SDLT will be due on the amount of the residual mortgage now taken on by you.

Some people might consider a transfer, declare nothing and hope that HMRC don't find out. I would comment that penalties for tax evasion are quite steep these days. im not saying you would do this I'm just adding it in.

amnblog

The probably would have been better off tax wise lending you the cash to buy.

As it is you can buy from them below market value without putting cash in.

They may be looking at capital gains tax, and you will be looking at stamp duty land tax.

Speak to a good broker.