Can I act as the Bank for my Daughter to buy my House

WoodyMay

I have a mortgage free house, is it possible for my daughter and husband to buy this off me direct. 
For example 
Value £280000.00 
They pay me x amount each month until it is paid off rather than renting it off me. 
I would get it drawn up legally if it is possible. Would there be any tax implications? 

Brie

Presumably there will be CGT if you don't live there.  And presumably you would sell it in one go (rather than in increments) so there would be stamp duty for them.  

Definitely you would have to have solicitors involved.  And perhaps guide them to get wills.  And keep in mind what you want to do about it all if, hopefully not, there is a falling out between them.  Or even between both of them and you.  How far will you go if they stop paying?

Long ago and far away my parents sold a property in this manner to an unrelated party.  Repossession when they stopped paying was an absolute buggy.  

Keep_pedalling

You would in effect be providing them with a private mortgage which is perfectly possible, although you need to document the loan agreement and protect your loan through a charge on the house.

If this is a second property you may have a CGT liability on the transfer and as these are connected people that will be based on full market value even if you sell at a discounted valuation. If this is your current home that you are moving out of then that is not an issue.

sheenas

Yes you can lend to your daughter. Care is required regarding things what happens if you die,
you may
wsnt to make sure it’s not seen as a gift for tax purposes. Further on the tax front, make sure you can prove it’s not a taxable income. 

lr1277

My only thought was what happens if you die before they have paid off the full amount? Do you or your estate need the full funds? Is your will distributing the full funds? Or will your daughter be getting the house anyway so it doesn't really matter?

Also where will you live after they have bought the property? If you continue to live there, I wonder if you will get into gift with reservation territory? (Sorry no idea about the answer). 

Edited to add: if your daughter is getting the house anyway, why not leave it to her in your will. So you can use the allowance for IHT. Also saves any messiness if she stops paying or she splits up with her partner.

NorthYorkie

Assuming that the sale of this house will not attract Principal Private Residence Relief, the actual sale price will be ignored for Capital Gains Tax purposes because it is a transaction between 'connected persons' (as mentioned earlier). The sale price will be taken as the expected price to be received in a sale in the 'open market'. The whole of the tax thus calculated will be due for the year in which the sale takes place (i.e. when the beneficial title is transferred). At that point the tax you have to pay may well exceed the instalments you will have received. However it is possible to claim to pay the tax by instalments, BUT only over a maximum of 8 years, so you may still have a cash flow problem.

WoodyMay

thank you all. I have a holiday home I am planning to move into permanently. I do have two daughters at the moment my will splits everything 50/50 hence the need for her to purchase it. I think this is more complicated than I thought it might be, back to the drawing board. 

Thank you all again