Sole property sale to relative

2muchfun

Trying to stay legal & simplify life. We own one property which our son & his family live in. We stay in a property owned by our daughter. Can we sell the owned property to our son. Currently he pays a ‘rent’ below market value & is updating the property. Would he have to get a mortgage to show money has changed hands or can we just change ownership names? Is it likely that he could get a mortgage? He currently has a buy to let mortgage on a property which is rented out in the area they used to live in. Thanks for any advice.

BoGoF

Do you have a mortgage on the property?

Forester50

Yes are free to sell you property to your son, or anyone else.

However, you need to bear in mind that if the sale price is less than the market value then this will be regarded as "Deprivation of Assets" should you ever require state care. From an IHT persepctive the normal sliding scale will apply

Keep_pedalling

You also need to consider your CGT liability on the transfer of your property which will be based on the full market value not the discounted sale price. 

km1500

you can gift your property to your son that way there will be no stamp duty to pay as the consideration will be zero (*). should you wish of course you could sell it and sdlt rates will apply depending on what the sale price was

you will have to pay capital gain tax on the profit which basically is the difference between what you bought it for and the market value. you can deduct buying and selling costs and any money you have spent on improvements (not repairs)

the market value less sale price (cash received)  will also become part of your inheritance tax allowance although it will drop off if you live 7 years from the date of sale

you don't say how old you are but if you are in reasonable health and have absolutely no thoughts of needing a care home now or in the near future then I would not worry about deprivation of assets aspect.

(*) provided no mortgage on it

2muchfun

There is no mortgage on the property.
If we purchase another property would this negate CGT liability?
I am an active, healthy 69.
Apologies for answering en bloc but can’t see how to make it individual!!

macman

Are you in Scotland, or a Scot living elsewhere in the UK?

2muchfun

Macman - neither. Relevance?

km1500

no - you pay the cgt whatever you do with the sale money

propertyrental

2muchfun said:

If we purchase another property would this negate CGT liability?

No. CGT is due on any asset that increases in value.

However Private Residence Relief exempts your main residence.

https://www.gov.uk/tax-sell-home

lincroft1710

2muchfun said:

.
If we purchase another property would this negate CGT liability?

No. You are liable for CGT on the sale of any property which is not your main home