Sold to family - advice

bmthmark

Hi

Someone I know has bought their parents house for roughly £65k below the market value.
It was all done via solicitors but it makes me think this can't be right.

Surely they are rigging the system as less tax will be paid?
I did mention this at the time but they said that the house needed a lot of work hence the price drop.
The house purchase all went through smoothly.
What do you think the likely outcome will be? will they have to pay more tax later on? will they suddenly get a letter saying you owe x amount? my friend said he would just say the house needs loads of work. No valuation was done at the time.

The money we are talking is similar properties have sold for £250k and my friend paid £185k

Just interested to know peoples thoughts on this.

Surrey_EA

Nothing at all will happen.

As far as I am aware, it is up to the seller to decide what price they sell their property for. As long as no money has changed hands in addition to the contract sale price, then no laws have been broken.

davidmcn

Which tax are you concerned about? Do you really think buyers and sellers aren't allowed to negotiate a price that suits them?

booksurr

you are missing key facts...either establish them or perhaps leave the people to their own life?

define "parents house"?
if its the place they have always lived in since they bought it then they can sell it to whoever they want to for whatever amount they want. No tax is due

if they no longer live in it then they would have a CGT liability when they sell, but would be able to claim various tax relief so may not actually have to pay any tax. Lots more facts and figures required to establish that position

BJV

I sort of understand. Why shouldn't a parent want to help their children. In fact I plan to sign over my house to my son and pay him rent. I have worked hard all my life, taken lots of risks, missed lots of holidays and time off to provide for my family and as I understand it although I am fit, healthy and well if in later years I needed help the powers that be could force a house sale to help pay for it.

tykesi

Sounds like sour grapes to me!

Pixie5740

BJV wrote: »

I sort of understand. Why shouldn't a parent want to help their children. In fact I plan to sign over my house to my son and pay him rent. I have worked hard all my life, taken lots of risks, missed lots of holidays and time off to provide for my family and as I understand it although I am fit, healthy and well if in later years I needed help the powers that be could force a house sale to help pay for it.

Is that the most tax efficient way to go about things?

mrginge

BJV wrote: »

I sort of understand. Why shouldn't a parent want to help their children. In fact I plan to sign over my house to my son and pay him rent. I have worked hard all my life, taken lots of risks, missed lots of holidays and time off to provide for my family and as I understand it although I am fit, healthy and well if in later years I needed help the powers that be could force a house sale to help pay for it.

Sounds like a plan that could not possibly go wrong.

silvercar

If your friend took a mortgage based on full value with a gifted deposit for the difference then the stamp duty should have been calculated based on the full amount.

bmthmark

davidmcn wrote: »

Which tax are you concerned about? Do you really think buyers and sellers aren't allowed to negotiate a price that suits them?

That's the thing i'm not aware of any tax implications. I'm just curious as what's what's stopping them from selling now at the higher amount. Surely they would of gained and somewhere along the line less stamp duty would of been paid.

AdrianC

BJV wrote: »

and as I understand it although I am fit, healthy and well if in later years I needed help the powers that be could force a house sale to help pay for it.

Yes, your assets can be (and should be) used to provide for your care. Why should I subsidise your son's inheritance?