buying a house off parents

Gangawalla8065

I dont know if anyone can help with this. Im buying the house i live in off my parents. The house is worth £325000 and im just paying whats left on the mortgage £125000. Would either side be liable for capital gains tax or the like. I have no idea on any of this and dont want to have a shock of a massive tax bill at the end of it.

thankyou

TheJP

I would assume so, its based on value not what it was sold for i believe.

BikingBud

Gangawalla8065 said:

I dont know if anyone can help with this. Im buying the house i live in off my parents. The house is worth £325000 and im just paying whats left on the mortgage £125000. Would either side be liable for capital gains tax or the like. I have no idea on any of this and dont want to have a shock of a massive tax bill at the end of it.

thankyou

Do you have an independent solicitor working for you and protecting your interests?

If so, I would seek their advice. 

If not, I would strongly recommend that you get one.

TrickyDicky101

From a CGT perspective, for your parents the sale of the house is to a connected party (you) so the fair market value of the house will be used to determine their gain (on which CGT could be due).  Depending on how much it originally cost and whether they have any allowable expenses to offset will ultimately determine what their chargeable gain is.

user1977

BikingBud said:

Gangawalla8065 said:

I dont know if anyone can help with this. Im buying the house i live in off my parents. The house is worth £325000 and im just paying whats left on the mortgage £125000. Would either side be liable for capital gains tax or the like. I have no idea on any of this and dont want to have a shock of a massive tax bill at the end of it.

thankyou

Do you have an independent solicitor working for you and protecting your interests?

If so, I would seek their advice. 

If not, I would strongly recommend that you get one.

It's the parents who have any Capital Gains Tax liability on the sale, so more for them to seek advice. There are no tricky tax issues for the OP I can see.

p00hsticks

Do you parents live with you ?
Have they ever lived in the property ? 
Which part of the UK is it ? 
Is this your first house purchase ?

Keep_pedalling

You will definitely not have a CGT liability, but if your parents live elsewhere the will and it will be based on the full market value. 

born_again

I would also be careful as if parents need to go into care, then that will be classed as depravation of assets. Buying house well under sale value

user1977

Deprivation. Important difference between being deprived and depraved.

NorthYorkie

Don't overlook Inheritance Tax. Your parents will be making a gift of £200,000 which is a potentially exempt transfer. Actually a better name is a 'potentially chargeable transfer' because if either of them dies within 7 years of the gift, their share of that value will be added to their estates for Inheritance Tax purposes. Of course, whether any tax is actually due will depend on the value of their estates and the availability of any nil rate bands.

BikingBud

user1977 said:

BikingBud said:

Gangawalla8065 said:

I dont know if anyone can help with this. Im buying the house i live in off my parents. The house is worth £325000 and im just paying whats left on the mortgage £125000. Would either side be liable for capital gains tax or the like. I have no idea on any of this and dont want to have a shock of a massive tax bill at the end of it.

thankyou

Do you have an independent solicitor working for you and protecting your interests?

If so, I would seek their advice. 

If not, I would strongly recommend that you get one.

It's the parents who have any Capital Gains Tax liability on the sale, so more for them to seek advice. There are no tricky tax issues for the OP I can see.

To me it is more than just the tax liability. 

Why would you not seek your own professional advice to cover the largest expenditure you are likely to make.

There may be no end of issues with the title/covenants/boundaries/liabilities etc that we see everyday on here.

Why not get the advice and protect yourself?