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Selling house to child

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  • Albermarle
    Albermarle Posts: 27,871 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    also bear in mind if you think this is protecting you from care home fees then it is not 100% certain. Yes of course you have the money from the sale, but the discount you give her may still be treated as deprivation of capital if you need to claim care home costs 

    Also the discount would be seen as a gift for IHT purposes. So if the OP died within 7 years it would be counted back into their estate.
    Although it depends how big it is, as if it was only say 5% it could be argued it was within the usual +/- when valuing a house.
  • pjs493
    pjs493 Posts: 576 Forumite
    500 Posts First Anniversary Name Dropper
    The fact that she will be paying below market value complicates things from a tax perspective and I’d suggest getting at least some basic legal and financial advice before you proceed. 

    A few years ago my husband and I planned to buy my parents’ house when they moved. We sought advice and because we planned to pay the market value it was going to be fairly straightforward. We planned to use it as a rental property. 

    Because my parents had lived there since the mid-1990s and I knew the history of the house and work done we planned to forgo a survey and searches except for what the mortgage company wanted done. It would have been a straightforward transaction so there would have been a saving in survey, searches, solicitor fees, and of course no agency fees to pay by my parents as it was a private sale. They’d agreed to drop the price by the amount they’d be saving in agency fees which would have been about £3k. So still considered market value. 

    We didn’t go ahead in the end due to unrelated reasons, but when we sought financial and legal advice we were told it was all very straightforward and savings would be had because it was a private sale. We were warned that if we bought for below market value we’d all have complicated tax problems, etc to contend with. 

    This was in England so the situation may differ in Scotland. 
  • Albermarle
    Albermarle Posts: 27,871 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    pjs493 said:
    The fact that she will be paying below market value complicates things from a tax perspective and I’d suggest getting at least some basic legal and financial advice before you proceed. 

    A few years ago my husband and I planned to buy my parents’ house when they moved. We sought advice and because we planned to pay the market value it was going to be fairly straightforward. We planned to use it as a rental property. 

    Because my parents had lived there since the mid-1990s and I knew the history of the house and work done we planned to forgo a survey and searches except for what the mortgage company wanted done. It would have been a straightforward transaction so there would have been a saving in survey, searches, solicitor fees, and of course no agency fees to pay by my parents as it was a private sale. They’d agreed to drop the price by the amount they’d be saving in agency fees which would have been about £3k. So still considered market value. 

    We didn’t go ahead in the end due to unrelated reasons, but when we sought financial and legal advice we were told it was all very straightforward and savings would be had because it was a private sale. We were warned that if we bought for below market value we’d all have complicated tax problems, etc to contend with. 

    This was in England so the situation may differ in Scotland. 
    I agree, although there is probably some wiggle room as valuing houses is not an exact science, but maybe only 5% at most.
  • km1500
    km1500 Posts: 2,790 Forumite
    1,000 Posts Second Anniversary Name Dropper
    it is perfectly possible to sell below market value (or even gift) your main residence to anyone you want with no tax implications

    the only things to consider is that for inheritance tax purposes it will be deemed to be a transfer at market value and for capital gains purposes it will be the price paid

  • Bookworm105
    Bookworm105 Posts: 2,016 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 26 November 2024 at 10:04PM
    km1500 said:
      inheritance tax purposes it will be deemed to be a transfer at market value and for capital gains purposes it will be the price paid

    you are rather mixed up

    IHT has no interest in "transfers". It will be valued for IHT at market value for probate purposes. What happens to it after that is irrelevant for IHT.

    For CGT purposes market value, not price paid, will certainly be used in certain circumstances - see earlier post 
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