Selling a house cheap to a family member

Jput

I bought a house for my parents 15 years ago, as they were not able to get a mortgage at the time. I have never lived at the property, and they have covered all of the mortgage payments and any costs incurred (all of which I have declared for tax purposes). My wife and I jointly own our residence, so my parents home is a 2nd property for me, but not a profit seeking venture on my part.

For various reasons I am now keen to sell the house to my parents and remove myself from the equation. The house is worth approximately 90k, of which approximately 50% has been paid off. My parents have found they are now potentially able to get a mortgage for 60k.

So I want to sell a house valued at 90k for 60k. I understand it might be possible to do this using a ‘gifted equity mortage’. Research on the web also seems to show that I won’t have to pay stamp duty but will be liable for Capital Gains Tax - is this correct? Is it possible to calculate a ballpark figure of CGT based on the above figures?

Also, apart from solicitors fees, what are the other potential costs?

Thanks in advance.

Keep_pedalling

Any CGT you pay will be based on the market value of the house not what you sell it for. If your parents are first time buyers then they will be exempt from paying stamp duty.

00ec25

CGT is a tax on a gain.

To have a gain you need a start point. The start point is what it cost to buy 15 years ago

to work out the gain you need an end point.

The end point is the market value, not what price parents pay, because the transaction is between connected parties and falls under market value rules

you have not given the start figure to get a ball park

AnotherJoe

Jput wrote: »

Is it possible to calculate a ballpark figure of CGT based on the above figures?
.

No because you didn't say what you bought it for ! Also, was it just you or you and wife that bought it?

da_rule

You won’t pay stamp duty, that’s a tax for buyers only. If your parents have never owned a property before then they will be able to claim first time buyer relief.

There is also a potential inheritance tax implication in relation to the gifted equity, in that it will continue to form part of your estate (albeit reduced on a yearly basis) for 7 years from the date of the gift.

Keep_pedalling

da_rule wrote: »

You won’t pay stamp duty, that’s a tax for buyers only. If your parents have never owned a property before then they will be able to claim first time buyer relief.

There is also a potential inheritance tax implication in relation to the gifted equity, in that it will continue to form part of your estate (albeit reduced on a yearly basis) for 7 years from the date of the gift.

It will not be reduced on a yearly basis, that only applies for gifts that exceed your nil rate band, and even then only for the part of the gift exceeding the NRB.