property ownership transfer/sale between relatives

samver

i live in a property owned by my sister, she is willing to "sell" the house to me for the price of the outstanding mortgage, which is approx 30% below market value

is this allowed ? Tax implications ?

or i give my sister the money to clear the mortgage and she then transfers the house into my name

any advice or recommendations of experts i could speak to would be much appreciated

many thanks adam

MyRealNameToo

You can sell the house for whatever price you want however for CGT and SDLT the price may be considered different to the amount of money that actually exchanges hands.

How are you funding the purchase? Savings or a mortgage? Are you taking over her mortgage or getting a new mortgage?

Are you legally counted as a first time buyer? Do you own other property?

What is the market value?

For you SDLT is likely to be based on the price you actually pay

For her CGT is likely to be based on the market value of the property as a transaction with a close relative

Keep_pedalling

Assuming this is England or Wales, you will pay SDLT based on the price you pay. If this is not also your sister’s home any CGT liability she has will be based on the full market value of the property.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82036636#Comment_82036636

https://forums.moneysavingexpert.com/discussion/comment/82036732#Comment_82036732

One of these two must be incorrect with respect to SDLT. My understanding was as per MRNT, but my understanding may be incorrect.

AIUI, as the OP is buying at undervalue from Sister, that is considered "connected persons" and therefore full value is used for SDLT calculation.

Can anyone confirm definitively?

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82038999#Comment_82038999

The answers are the same, but SDLT is more nueanced and things change slightly depending on the unanswered questions