Buying a property from a relative

1000dom

we are considering buying a holiday cottage from my parents to use as our house. Could anyone recommend the best way of proceeding to reduce the tax liability on both parties.

Look forward to hearing recent experiences / ideas.

regards

subjecttocontract

Your post is a little light on detail so I'll make a few assumptions.

If your parents are selling a holiday cottage they will be liable for Capital Gains Tax (CGT) on any profits. This can be minimised by holding the property in joint names (husband & wife) so both can use their annual CGT allowance (£9500 each I think). Tax is 18% on the difference between what they paid for it and what they sell it for.

If you are buying the property as your PPR......thats your main home you will need to pay SDLT (the old stamp duty......now stamp duty land tax) and Council Tax. There are no other taxes.

rdpro

Depends on the property value, but you can do a transfer of equity which is a relatively straightforward Land Registry form (TR1?) which costs £40. Many solicitors will undertake the paperwork to minimise tax liability with regard to stamp duty for a fixed fee - I paid £200 plus registry fees when buying my house from friends. My brother paid a bit more when he bought out my share of my mothers home - the solicitor did 2 deed transfers, first to remove my name from the deeds, then another to add my sis-in-law in order to avoid possible comeback on stamp duty.

PasturesNew

When you buy it, you might need to do something a little different... as a holiday home they might have registered to pay Business Rates instead of Council Tax. Check and then when you buy it make sure you're registered for Council Tax again, not Business Rates.

BobProperty

subjecttocontract wrote: »

If your parents are selling a holiday cottage they will be liable for Capital Gains Tax (CGT) on any profits. This can be minimised by holding the property in joint names (husband & wife) so both can use their annual CGT allowance (£9500 each I think). Tax is 18% on the difference between what they paid for it and what they sell it for.

While not disagreeing with the above, a Holiday Home is a business so there may be other reliefs available depending on what the vendors are going to do with the money. I don't know the tax rules but roll-over into another business or a pension used to be possible IIRC.