Buying house off parents

steampowered

holib22 wrote: »

So am I understanding this correctly then, if they bought the house for 70k on the transfer of ownership when mortgage is paid if the house is worth 100k they will pay capital gains tax on the 30k??

That sounds correct to me. However you will want an accountant to help you make sure that the £100k is a justified figure. You don't want HMRC turning round and saying the true value of the house is actually £130k so you should be paying twice as much CGT.

For the same reason you'll want to check that the value of the property is £100k for stamp duty purposes (so that you can be sure you are below the £125k threshold for stamp duty).

As advised, you also need to get some proper advice about making sure that your parents don't receive an enormous income tax bill (and penalties for non-payment) for your historic mortgage payments.

It is correct that your parents may be in breach of their mortgage terms if they obtained a standard mortgage without consent to let, but realistically I doubt the mortgage company will care as they are about to be paid in full.

I think the person you need to speak to is a property accountant. You should use a solicitor as well to actually do the transfer, but a solicitor might not be the best person for tax advice (and the solicitor's time will probably be more expensive than the accountant's time).

Guest101

steampowered wrote: »

That sounds correct to me. However you will want an accountant to help you make sure that the £100k is a justified figure. You don't want HMRC turning round and saying the true value of the house is actually £130k so you should be paying twice as much CGT.

For the same reason you'll want to check that the value of the property is £100k for stamp duty purposes (so that you can be sure you are below the £125k threshold for stamp duty).

As advised, you also need to get some proper advice about making sure that your parents don't receive an enormous income tax bill (and penalties for non-payment) for your historic mortgage payments.

It is correct that your parents may be in breach of their mortgage terms if they obtained a standard mortgage without consent to let, but realistically I doubt the mortgage company will care as they are about to be paid in full.

I think the person you need to speak to is a property accountant. You should use a solicitor as well to actually do the transfer, but a solicitor might not be the best person for tax advice (and the solicitor's time will probably be more expensive than the accountant's time).

Only for a residential mortgage, for a BTL they are being underpaid - and yes they will care!