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Keeping money back - Property Sale

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ulldins
ulldins Posts: 10 Forumite
in House buying, renting & selling
Hi,

Hope someone could help.

I am planning to sell my house for approx 80k, to fund a house move.

I would like to put 60k towards the deposit of the new home and use remaining 20k to pay off some high interest debts, I have been stuck with for many years.

If I was to keep back 20k from the sale, what implications should I be aware of?

Any tax/NI deductions on the 20k?

Thanks in advance
«1

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  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    It's not "income" for the purpose of income tax or national insurance.
    If it hasn't been your main residence for the whole time you've owned it then there could be capital gains tax (but that would be calculated on the total price, not just the 20k).
    But probably no tax payable.
  • ulldins
    ulldins Posts: 10 Forumite
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    davidmcn wrote: »
    It's not "income" for the purpose of income tax or national insurance.
    If it hasn't been your main residence for the whole time you've owned it then there could be capital gains tax (but that would be calculated on the total price, not just the 20k).
    But probably no tax payable.

    Thank you, I have lived in it for over 10 years, and my dad has gifted it to me with zero mortgage, but we looking at selling it and moving to a bigger home.
  • saajan_12
    saajan_12 Posts: 3,622 Forumite
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    ulldins wrote: »
    Hi,

    Hope someone could help.

    I am planning to sell my house for approx 80k, to fund a house move.

    I would like to put 60k towards the deposit of the new home and use remaining 20k to pay off some high interest debts, I have been stuck with for many years.

    If I was to keep back 20k from the sale, what implications should I be aware of?

    Any tax/NI deductions on the 20k?

    Thanks in advance

    There's no distinction between the 60k and 20k.. the total 80k is proceeds from a house sale so that figure is subject to capital gains tax (if you havent personally lived in the house for the entire time you have owned it). Note its the total sale price thats relevant, not the amount after mortgage has been paid off.

    What you subsequently use the money for is irrelevant to taxes etc. For the new purchase, you apply for whatever you'll need to borrow (ie purchase price - 60k). If you are buying another property through the same solicitor who's dealing with your sale, at the same time / soon after, you can instruct them to use the money from your sale towards your purchase. If they receive 80k + new mortgage, and have to pay purchase price 60k + new mortgage then they'll have 20k left over which they'll pay you soon after completion.

    Note
    1) You'll need some money for costs (solicitors, estate agents, mortgage application, stamp duty..). Where is this coming from: the 60k or 20k?

    2) You're effectively making your (presumably) unsecured high interest debts into a secured debt (mortgage) as you're borrowing an extra 20k. If you can't afford repayments on that, your home could be at risk.
  • ulldins
    ulldins Posts: 10 Forumite
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    Thanks for you advice and comments.

    I have been living in the property for the past 10 years, and this year my dad has gifted the property to me and transferred the deeds to my name via land registry.

    The 20k is to pay off debt (15k) and remaining 5k is for the fees, anything extra will be any savings, I may have.
  • saajan_12
    saajan_12 Posts: 3,622 Forumite
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    ulldins wrote: »
    Thanks for you advice and comments.

    I have been living in the property for the past 10 years, and this year my dad has gifted the property to me and transferred the deeds to my name via land registry.

    The 20k is to pay off debt (15k) and remaining 5k is for the fees, anything extra will be any savings, I may have.

    That changes things.. if your father owned the property while you were living there, he may have had some CGT to pay. This would be based on the market value at the time he made the gift to you (doesn't matter how much you paid for it ie £0)

    Re your tax, have you lived there the entire time you have owned it (ie from when your father gifted it to you until you sell it)? To unravel everything, please give

    1) dates father lived in house if at all
    2) dates you lived in house if at all
    3) date & value when father purchased house
    4) date & value when father sold / gifted house to you
    5) date & value when you will sell house
  • G_M
    G_M Posts: 51,977 Forumite
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    There is also potentially Inheritance Tax to pay in the future if dad were to die within 7 years of making the gift.


    The £80K 'gift' he gave you would be included in his Estate when evaluating it for IHT.
  • ulldins
    ulldins Posts: 10 Forumite
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    saajan_12 wrote: »
    That changes things.. if your father owned the property while you were living there, he may have had some CGT to pay. This would be based on the market value at the time he made the gift to you (doesn't matter how much you paid for it ie £0)

    Re your tax, have you lived there the entire time you have owned it (ie from when your father gifted it to you until you sell it)? To unravel everything, please give

    1) dates father lived in house if at all
    2) dates you lived in house if at all
    3) date & value when father purchased house
    4) date & value when father sold / gifted house to you
    5) date & value when you will sell house

    Hi, thanks for the reply.

    So to complicate the matter further.

    The property in question was originally merged with the terraced house next door. Both properties have been known as one property (127-129).

    When my dad was made redundant, he asked if I would take on the second house (129) and it would be my property. This was in approx August 2007.

    Since then, I have taken responsibility of the property, paying the outstanding mortgage my dad had, the council tax etc etc. However all of those bills have stayed in my dad's name.

    Now as I wish to move to a bigger house, my dad has agreed to split the house back into 2 (Planning and Building Control has completed this week). Register with Land Registry that he has gifted the property to me, so I can then sell it and use it as a deposit.

    But answers to your question:

    1) dates father lived in house if at all - technically, he has lived in it up till the land registry change
    2) dates you lived in house if at all - since my dad bought it when I was 12 years old (now 30)
    3) date & value when father purchased house - year 2000, value approx 18-20k
    4) date & value when father sold / gifted house to you - date: now value: £0
    5) date & value when you will sell house - Date: 2019 - value £80k
  • sal_III
    sal_III Posts: 1,953 Forumite
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    Your posts are a bit confusing. Is the half of the property already in your name or not?
    (Planning and Building Control has completed this week)

    If not, It might be easier for your dad to do the sale and just gift you the funds for a deposit.
  • ulldins
    ulldins Posts: 10 Forumite
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    sal_III wrote: »
    Your posts are a bit confusing. Is the half of the property already in your name or not?



    If not, It might be easier for your dad to do the sale and just gift you the funds for a deposit.

    No, the property is now split back into two terraced houses and the next step is for the title deeds to be registered to me


    I did suggest to my dad to sell the house himself and gift me the deposit, but he is worried about his implications of doing this and recieving 80k cash.
  • TBagpuss
    TBagpuss Posts: 11,203 Forumite
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    ulldins wrote: »

    But answers to your question:

    1) dates father lived in house if at all - technically, he has lived in it up till the land registry change
    2) dates you lived in house if at all - since my dad bought it when I was 12 years old (now 30)
    3) date & value when father purchased house - year 2000, value approx 18-20k
    4) date & value when father sold / gifted house to you - date: now value: £0
    This bit is wrong. The value is the open market value of the house. The fact that you didn't actually pay your dad for it is irrelevant when looking at whether he has any CGT liability.
    5) date & value when you will sell house - Date: 2019 - value £80k
    All posts are my personal opinion, not formal advice Always get proper, professional advice (particularly about anything legal!)
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