Receiving mortgaged property as a gift from parents

Abc1988

Hi

My parents are looking to gift me their primary residential property worth £400k. They will look to rent elsewhere before deciding their next steps. The property has a mortgage of £150k and I aim to pay this off with taking a mortgage in my own name. I have never owned a property before.

I am wondering the most tax efficient way around this, if i went down the route of buying the property outright at its current value then i’d pay a large amount in stamp duty. I understand if i buy at a discount Say £200k then I wont be able to get a mortgage or it will be a much lower amount.

Someone told me that there is a way to get ownership but i’d have to pay tax on the existing mortgage amount which i am fine with but dont know what I should be doing next.

Help would be appreciated.
Thanks

Sachs

So they cannot gift you the whole property as they owe 150k on it. They can sell it to you for 150k and use that money to pay off the mortgage.

You would need to find a bank who would lend you the 150k but the transaction might put off some high street lenders so I suggest going to a broker.

You pay SDLT on the consideration which in this case will be at least 150k depending on how it all washes out.

You may have to pay significant extra tax later if your parents pass away within 7 years.

eddddy

Abc1988 wrote: »

I understand if i buy at a discount Say £200k then I wont be able to get a mortgage or it will be a much lower amount.

A few lenders offer "concessionary purchase mortgages". They could allow you to buy the property for £200k, and get a £200k mortgage (assuming that the market value of the property is much higher than that).

But you would still need to pass the lender's affordability tests - i.e. they'd check your income and outgoings to make sure you can afford to pay off a £200k mortgage.

"Concessionary purchase mortgages" tend to be available through brokers. Here's a couple of examples:

https://www.nationwide-intermediary.co.uk/lending-criteria/purchase-types#concessionaryPurchase
http://intermediary.tsb.co.uk/criteria/residential-criteria/concessionary-purchase/

SDLT_Geek

There is some information about stamp duty land tax - SDLT - and concessionary purchases here: https://www.blakemorgan.co.uk/bank-of-mum-and-dad-concessionary-purchases/

caprikid1

You also need to consider deprivation of assets.