Stamp Duty

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Hello everyone
This may not be quite what this ng is about, but if anyone can help - or refer me to a ng that could - I would be very grateful.
Before anyone tells me that a solicitor would sort this out for me, I know that, but I would some like some idea about the process before I get to the stage of employing solicitors, etc.
Essentially I want to sell my house to my daughter for a nominal price - 35,000 instead of the 150,000 that it's worth. We have various reasons for wanting to do this. Mainly I just want to give her the property (it will be hers anyway some time in the future), but I need to pay off the existing mortgage - that's were the 35,000 comes in. Then my wife and I plan to move into another property that we have some involvement with, but don't own.
When she went to have a chat with a building society, about getting a mortgage, they said that there could be a Stamp Duty charge because of the value of the house - although Stamp Duty doesn't normally become payable until a property sells for more than 60,000 (or that used to be the figure - it may have changed).
Anyone got any ideas? Also we wouldn't want to go to the bother, and expense, of having searches and similar things done when we transfer ownership (we only bought the place three years ago). What are the rules about this?
If anyone can help I would be most grateful.
Many thanks
Phil
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I'm not sure how things work when you're selling property for less than the market value. Certainly, your solicitor will have to sign something to state that the amount sold for is not actually part of a larger transaction (ie. 20 for the house and a 200k backhander). Actually selling for 35k may be fine - though I'm not sure how this would work with inheritance tax? (Why not just sell the house for 1 and not have to pay the tax?).
Something which does appear to apply in your situation is that apparently, you can just give the house to your daughter (tax free) as long as it becomes their main residence. I'm sure someone else can clarify further - but it may be possible that you don't have to pay anything (and she doesn't have to buy it off you - rather you can just get her to give you 35k separately). Note that purchase prices get put on the Land Registry now - so if you sold it for 35k, then the next purchaser may question it.
One final thing - I don't believe there is any requirement for searches etc to be done if you don't want it to be. In your situation you are just handing over the house to your daughter - and she probably doesn't want searches/surveys etc being done.
From what I can see - you may just have to pay the Land Registry transfer fee of between 100 and 300 or so to update the records. Assuming you're allowed to sell for just 35k - then no Stamp Duty should be due either.
D
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Don't think it's a solicitor that you want, but rather a good tax accountant.
There's tonnes of stuff to consider, with implications left right and centre for all concerned, and if anyone will be good at helping you to exercise your right to minimise your tax burden (aka avoidance, but this is being branded "nasty, underhand" by govt spinners) then an accountant will be.
cheers Richard
-- Richard Sampson
email me at richard at olifant d-ot co do-t uk
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wrote:

I completely agree, and also find one who knows all of the implications regarding gift transfers and inheritance tax. While the fair market value of the property may not hit the inheritance tax threshold, the complete estate might. There are a whole bunch of rules in relation to that in terms of timing just as there are for gifts.
A lot of the information is buried, often quite obscurely in tax legislation since only the major issues tend to be widely published. This also means that the typical enquiries person in the tax office doesn't have a clue.
I'm currently involved (or rather my wife is) in being an executor where these issues arise. There is no doubt that the very good accountant that we have is the main player in this and the solicitor is virtually along for the ride.
.andy
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There is no doubt that the very good

good at charging everything that moves! Richard
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try uk.finance - there are some very helpful people in there !

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Phil Norman wrote:

I would echo what David said: Can't you give the house to your daughter, and get her to give you 35K?
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Why not? You can sell anything you like for what price you like. A future buyer knowing a house was sold for 1 would have searches on the house anyway, so no problem in the future.
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There are all sorts of laws about selling property below market rates. Inheritance tax implications, for example, and state payment of care fees where they believe assets have been disposed of to validate a claim. It would also be easy to find ways of avoiding tax by using suspicious disposals of property.
If you sold a house to someone for 1 and they gave you a gift of 200,000 the next month, you'd probably end up in prison, so it isn't possible to just give stuff away, especially if there is some implied contract.
On the inheritance tax side, if the daughter pays 35,000 for a house worth 200,000 and her parent/s dies within 7 years, she may have to pay some inheritance tax on the difference.
Paying 35,000 WILL attract the attention of the taxation authorities, so it probably does require the services of an accountant to smooth the passage. It may be better to notify the authorities of the deal, letting them know it is basically a gift from parent to daughter. I have no idea if stamp duty is on the sale price or the value of the property, if this is much lower than the sale price. I'm sure an accountant or solicitor can advise.
Christian.
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Why? It is my house so I sell it at what I like. If someone wants to give me 200,000 then that is our business. That is not an offence. The IR may stick taxes on you, which is another matter.
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But trying to evade the stamp duty is an offence.
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If you want to take on the Inland Revenue that's fine. But Gordon Brown expects his tax take to be maximised at all times - and if you appear to be defrauding him by doing shady deals then on your head be it.
You can sell your home for 1 if you want - but don't be surprised if the Inland Revenue supply you with a tax bill for 10's of 000's of pounds based upon what figure the property should have realised in the open market.
As others have suggested, this is tax fraud at work. Tax fraud means that you can be sent to jail and lose all your worldly possessions. It isn't simple tax avoidance where you are mitigating your affairs to minimise your tax liabilities - tax avoidance is everyones right. Tax evasion isn't.
Andrew
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Andrew McKay wrote:

This is the issue being debated. And it's an interesting one. Can someone - anyone - reference a Govt source which clarifies the matter one way or another.
The OP's dilemma hinges on this: if he can sell his 200K house to his daughter for 35K without breaking the law, or not.
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IMM wrote:

Are you being deliberately as thick as fuck or are you always like this? I've had enough of your ramblings so its time for IMM to hit the kill filter.
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It is plain you are a fool. Put me on your killfile .
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Christian McArdle wrote:

For what crime?

Contract law is different to criminal law.

The threshold for inheritance tax is 254,000 this year, isn't it?

What is this? National Hard-of-Thinking Day? Firstly, your scenario above doesn't match the OP. Secondly, stamp duty is payable on the sale price, obviously. Think of when you last bought a house - I bet you didn't pay the asking price. You make an offer, it's accepted; that's the price.
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If you used such a scheme to evade stamp duty the Inland Revenue would regard it as a linked transaction. They would impose the tax and penalty as well and could also prosecute.
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If they want to tax then they tax. Prosecute? For using the free market?
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No. For being involved with a tax evasion scheme.
You park your car at a parking meter, which times out 5 minutes before you get back. A meter maid slaps a ticket on your windscreen.
You come back and stick another coin in the parking meter, thus paying for the extra time. You drive off. Does that mean the parking ticket is void?
Andrew
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Peter Crosland wrote:

It seems to me that you would only be evading stamp duty if there were some other "backhander" involved.
In other words if the daughter pays only 35K for the property and nothing else, then this is the price end of story - hence no stamp duty to pay (there may be inheritance tax implications if the parent dies within 7 years - but that is a separate issue).
If the daughter pays 35K "officially" but then also pays more money by some other duplicitous route, taking the "effective" price over the stamp duty threshold then that would be classed as evasion.
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John.

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