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  • FIRST POST
    • Noz901
    • By Noz901 12th Apr 18, 5:43 PM
    • 7Posts
    • 0Thanks
    Noz901
    Selling a second house - Capital Gains Tax, Inheritance Tax etc
    • #1
    • 12th Apr 18, 5:43 PM
    Selling a second house - Capital Gains Tax, Inheritance Tax etc 12th Apr 18 at 5:43 PM
    Hi all,

    I am hoping some of you helpful people on here will be able to provide my family and I with some information regarding our current house sale & purchase situation.

    So, my Mum owns two houses, the first she purchased in the mid 80's and was a resident in it until 2007 at which point she purchased a second home and the new house became her permanent residence (this second home was a family home that she purchased from the family). The first home was initially rented out via an estate agent, and in 2009 I moved back into the house following university and securing my first proper job after education. I rented the house along with my best friend from my Mum, and have remained in the house since then, although my best friend has since moved out, and my Girlfriend has moved in. In terms of the rent, this is something that I no longer pay, as since approx. 2013 I have gutted the house and modernised it throughout.

    In terms of what mortgage etc remains on the houses, my Mum has fully paid of the first house, and has approx. 10k remaining to pay on her current house of which she is resident in.

    My Girlfriend and I are now in a position where we are wanting to purchase our own house together, and my Mum has kindly offered the sale of the house we are currently in to use as a large deposit on the house we eventually decide to pursue.

    Neither of us are particularly experienced in buying and selling houses and one of the things that has been flagged to us when discussing our plans with various friends is Capital Gains Tax and Inheritance Tax. As the house to be sold is not my Mum's existing residence, if we sold the house then she would be liable for CGT? I'm assuming as she purchased the house in the mid 80's then CGT would be rather high, as the value of the houses in this area have increased a lot.

    My Mum has offered to sign the house over to me ahead of putting it on the market, or it can remain in her name and be sold, and she will gift me the required deposit from the sale of the house.

    My question would be, considering the scenario we are currently in, what would be the best / cheapest way to allow us to sell the house that my Mum owns and is not a resident in, without committing tax fraud!

    Any comments, assistance, or previous experiences would be greatly appreciated.
Page 1
    • Slithery
    • By Slithery 12th Apr 18, 5:47 PM
    • 828 Posts
    • 1,305 Thanks
    Slithery
    • #2
    • 12th Apr 18, 5:47 PM
    • #2
    • 12th Apr 18, 5:47 PM
    Give us some figures and we can help work it out - there might not be any CGT due.

    Value of the property when bought?
    Value of property now?
    Date of purchase?
    Date mother moved out?
    Last edited by Slithery; 12-04-2018 at 5:50 PM.
    • Noz901
    • By Noz901 12th Apr 18, 5:50 PM
    • 7 Posts
    • 0 Thanks
    Noz901
    • #3
    • 12th Apr 18, 5:50 PM
    Further details
    • #3
    • 12th Apr 18, 5:50 PM
    Hi, thanks for the reply, additional details:

    First house bought in 1986 for approx 20k, the house is now valued at approx 150k.
    My Mum was a resident in this house from 1984 (initially rented from council) until 2007 at which point she purchased her second property and since then the second house has been her permanent residence.

    Thanks!
    • Noz901
    • By Noz901 12th Apr 18, 6:55 PM
    • 7 Posts
    • 0 Thanks
    Noz901
    • #4
    • 12th Apr 18, 6:55 PM
    • #4
    • 12th Apr 18, 6:55 PM
    Hi, and thanks for the reply.

    The rent was discounted as it is within the family. From 2013(ish) there has been no rent as I have funded the works to the house, i.e. new boiler, replastered, re-wired, new kitchen, new bathroom, new doors etc.
    • runninglea
    • By runninglea 12th Apr 18, 7:05 PM
    • 876 Posts
    • 1,313 Thanks
    runninglea
    • #5
    • 12th Apr 18, 7:05 PM
    • #5
    • 12th Apr 18, 7:05 PM
    during the period you were paying rent to your mother were you paying a heavily discounted rent or were you paying here somewhere near what a stranger would have paid in rent, ie market rate? It matters in deciding whether your mother can claim letting relief because she had a commercially let property or whether she can't because she had an noncommercial rental "business"
    Originally posted by 00ec25
    How would it work if you let the property to family members at a reduced rent?
    Year 2018 (8,500/17000mortgage repayment)Overall mortgage (64,600/165568) (39
    .0%) (38/100) payments made. Total paid 2018 year 8,500

    Total paid 2017 year 15,300Total paid 2018 year 8,500
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