Stamp duty if Parents move into my house

APMASON

Hi
My parents are in need of moving house and are keen to move to the house i own, they will sell their house and give me enough money to pay off my mortgage. I am currently working away in London and will rent in London.
This part is relatively simple but if my parents died within 7 years, i think, the money would be treated as part of their estate for IHT.
My issue though is if i subsequently want to buy a house as my primary residence in London, will i need to pay the additional 3% stamp duty even though my parents are in the other house that was my primary residence, will the fact i will rent in London remove the 3% stamp duty when i do buy another house, or will the fact is still own the 1st house (lived in by parents) mean i have to pay 3%

Thanks
Andy

marliepanda

You will have to pay the extra 3%. You are not relaxing your main residence. You main residence will be the house in London

Keep_pedalling

Would it not be simpler for them to buy your house outright?

saajan_12

Eggha has covered the tax implcations of what you are suggesting, so I can only offer alternatives. Is there any reason for doing it this way rather than selling some/all of the property to your parents?
• IHT: When you eventually inherit the property back, it would still incur the IHT,
• SDLT: No 3% higher stamp duty when you next buy.
• CGT: Assuming you have always lived in the property so far, if you sell part/all then you won’t pay CGT for the period you don’t live there and the part you nolonger own.

APMASON

thanks for the responses, my parents cant buy the house outright as it's worth 400k and the mortgage is about 180k (which is slightly less than they will obtain for their house). There is some rule i believe about selling houses to relatives for significantly reduced rates.

They will fall well below the IHT thresholds so i'm not worried if the money goes back into the estate, that would be the preference. I cant sell my house whilst they live in it so the best outcome seems to be to rent until they no longer occupy the house by dying or needing to go into some sort of sheltered accommodation.

If i sold them half the house i assume the 3% would still apply if i bought another as i would in fact still own the house.

Other option is to not let them move in and sell the house :-)

getmore4less

You could sell them the house for full market value.

they pay you £180k to clear the mortgage and they borrow the £220k off you(with a charge over the house).