Sold to family - advice

ReadingTim

The vendor is free to sell at whatever price they see fit, and tax is paid as a percentage of the actual price, not someone's arbitrary decision on what the price ought to have been.

The only way this could backfire is if the parents need local authority residential care in their old age, and the house sale is determined to be deliberate deprivation of assets; but there's too little information in the first post to do more than mention the issue.

However, if the OP is merely looking for someone to back up their adolescent whinge of "it's not fair...", then frankly, they should keep their nose out of other people's business.

bmthmark

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.

I totally agree and i'm planning on doing the same with my kids. But I wouldn't want my kids to be hit with some sort of tax bill

bmthmark

tykesi wrote: »

Sounds like sour grapes to me!

Definitely not my friend, just interested to know. This person is my friend I am very happy for him as this is what family should do. I intend to do the same for my kids :beer:

AdrianC

bmthmark wrote: »

I totally agree and i'm planning on doing the same with my kids. But I wouldn't want my kids to be hit with some sort of tax bill

3% SDLT should they ever buy a house for themselves... CGT when they sell it. IHT if you die within 7yrs of the gift. Potential to lose your home if your children get into debt or divorce.

And, even then, it may well be viewed as the deprivation of assets that it is, and you may still be required to pay for your own care instead of expecting others to subsidise their inheritance.

Pixie5740

bmthmark wrote: »

I totally agree and i'm planning on doing the same with my kids. But I wouldn't want my kids to be hit with some sort of tax bill

Yeah, hit your children with income tax on the rent paid, CGT when they eventually sell and possibly IHT when you die. That's an excellent plan. That's before you even consider the deliberate deprivation of assets should you need residential care in the future and the council putting a charge on the property anyway.

As mrginge says, "sounds like a plan that could not possibly go wrong." :beer:

bmthmark

booksurr wrote: »

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

I'm certainly not trying to get in to other peoples business. I just think its an interesting area and one that will affect me with my family (one day) so interested to know whats allowed.

To answer your questions, it was a family home then the parents moved out and my friend now lives there. So it sounds like CGT may apply

Silvertabby

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.

Then your son gets divorced (it does happen!) and the house has to be sold in order to give his wife her share of the marital assets.

bmthmark

Pixie5740 wrote: »

Yeah, hit your children with income tax on the rent paid, CGT when they eventually sell and possibly IHT when you die. That's an excellent plan. That's before you even consider the deliberate deprivation of assets should you need residential care in the future and the council putting a charge on the property anyway.

As mrginge says, "sounds like a plan that could not possibly go wrong." :beer:

Sorry I'm a bit confused, are you saying you shouldn't sell a property cheaper than the market price to a family member?
Most people on here have said they are not doing anything wrong doing this.
Sorry if I have misunderstood your answer

AdrianC

bmthmark wrote: »

Sorry I'm a bit confused, are you saying you shouldn't sell a property cheaper than the market price to a family member?
Most people on here have said they are not doing anything wrong doing this.
Sorry if I have misunderstood your answer

He's saying that the plan of sell-and-rent-back as a dodge around needing to pay for any of your own care in your dotage is not quite as simple as it looks.

The figure that the property's sold for is a completely separate question. If the deal is below market value, there may be an SDLT benefit, but there may be a CGT downside. There may also be IHT implications, since the difference could easily (and correctly) be viewed as a gift.

bmthmark

AdrianC wrote: »

He's saying that the plan of sell-and-rent-back as a dodge around needing to pay for any of your own care in your dotage is not quite as simple as it looks.

The figure that the property's sold for is a completely separate question. If the deal is below market value, there may be an SDLT benefit, but there may be a CGT downside. There may also be IHT implications, since the difference could easily (and correctly) be viewed as a gift.

Thanks AdrianC