Quizzes & Puzzles2 mins ago
property question
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Can i legally sell my property to my daughter for half its market value? She has �130,000 to buy it but its worth around �260,000. I am happy to sell it to her for 130,000 but not sure if I legally can?
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Yes you can.
Stamp duty land tax will probably be payable on the full market value, regardless of how much she actually pays - the tax man does like his share.
Inheritance tax must be thought about - this is a Potentially Exempt Transaction - if you survive seven years after the sale of the house there will be no inheritance tax to pay.
If you intend to live in the house as well, further complications are thrown up.
You must of course get proper legal advice to make sure you do the best for yourself and your daughter in the long term.
Stamp duty land tax will probably be payable on the full market value, regardless of how much she actually pays - the tax man does like his share.
Inheritance tax must be thought about - this is a Potentially Exempt Transaction - if you survive seven years after the sale of the house there will be no inheritance tax to pay.
If you intend to live in the house as well, further complications are thrown up.
You must of course get proper legal advice to make sure you do the best for yourself and your daughter in the long term.
Presumably there is no mortgage so it is quite a simple matter in point of fact.
Firstly, though, you must look at it differently to the way you have expressed it. You will have to sell your house to your daughter for �260,000. This can be DIY via the appropriate Land Registry forms and nothing else if you are capable of a bit of form filling (speak to your local Land Registry, they will guide you through - their fee total around �80). You also have to obtain a Stamp Duty Land Tax Certificate by phoning 0845 6030135 which will be issued after you have paid any Stamp Duty due and without which the Land Registry cannot do anything.
Then as between yourself and your daughter you accept the �130,000 in full and final settlement and make a formal gift to your daughter of �130,000. Your daughter should provide you with her cheque at the same time as you each sign the Land Registry forms. The gift will then have to be taken into your estate for Inheritance Tax calculation if you die within 7 years, but the rate of Tax is on a diminishing scale during this period finally ending up at nothing.
Firstly, though, you must look at it differently to the way you have expressed it. You will have to sell your house to your daughter for �260,000. This can be DIY via the appropriate Land Registry forms and nothing else if you are capable of a bit of form filling (speak to your local Land Registry, they will guide you through - their fee total around �80). You also have to obtain a Stamp Duty Land Tax Certificate by phoning 0845 6030135 which will be issued after you have paid any Stamp Duty due and without which the Land Registry cannot do anything.
Then as between yourself and your daughter you accept the �130,000 in full and final settlement and make a formal gift to your daughter of �130,000. Your daughter should provide you with her cheque at the same time as you each sign the Land Registry forms. The gift will then have to be taken into your estate for Inheritance Tax calculation if you die within 7 years, but the rate of Tax is on a diminishing scale during this period finally ending up at nothing.
1. Sale at undervalue IS valid- but see below.
2. SDLT not payable at all until >�125 000. It is is a tax on consideration passing (�130 000) and not on full value (�250 000). SDLT would be �1300- unless property in disadvantaged area, when trigger would be �150 000- so why not sell to her for �125 000 and [legally] avoid the tax?
3. If you went insolvent within five years, however, your trustee in bankruptcy could reverse the sale to recover the �130 000 given away.
4. TAKE PROPER LEGAL ADVICE.
2. SDLT not payable at all until >�125 000. It is is a tax on consideration passing (�130 000) and not on full value (�250 000). SDLT would be �1300- unless property in disadvantaged area, when trigger would be �150 000- so why not sell to her for �125 000 and [legally] avoid the tax?
3. If you went insolvent within five years, however, your trustee in bankruptcy could reverse the sale to recover the �130 000 given away.
4. TAKE PROPER LEGAL ADVICE.
I'm probably in too late but in terms of the validity of the sale, the law says that consideration does not have to be adequate, so you could sell your property for �1 if you wished. Clearly, in respect of tax, you should definitely consult a tax advisor or lawyer. Property and tax are complex issues. Good luck!
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