Stamp Duty

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"Phil Norman" wrote | 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.
One point to consideder is that in the vague and distant future your daughter's liability for capital gains tax may be based on the difference between what she pays now and its future value. It might be better for your daughter to pay you a more realistic value for the house now (perhaps just below stamp duty threshold) to lessen her tax burden later. You could then give her a gift in cash, which I think will be inheritance tax free if made

I agree with RichardS that it's a tax accountant you need. You should consider the overall liability for tax across both your and her circumstances.
Owain
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Owain wrote:

I would agree with that. I've recently been filling in Inland Revenue forms while winding up my late father's affairs and one thing it explicitly asked was whether his house had been sold at an artificially low price (can't recall whether there was a time limit on that, but it might have been 7 years). I guess that is to catch people trying to avoid Inheritance Tax.
Another gotcha with selling property is if you should be unfortunate enough to end up in a Nursing Home or such and have to claim State Benefits to cover/help with the cost. If you have given your home to your child(ren) within the preceding 7 years (or sold it to them for a token price) then the Social Services still consider it yours[1] and consider that you have assets equal to it's realistic market price, i.e. you won't get any benefits even if you are otherwise penniless. Again, I speak from experience of dealing with my father's affairs when he ended up in a Nursing Home following a stroke.
[1] There was a court case a couple of years ago about this where the plaintiff claimed that the house was given (about 4 years previously) to the children *before* (s)he became ill and therefore the Soc. Sec. couldn't treat it as an asset. The court ruled in favour of the plaintiff.
Expert advice is definitely recommended.

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wrote:

How about she buys 35/150ths of the place for now?
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Might be complicated legally, but it sounds like a possibility. Having to have a building society involved could prove awkward though.
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wrote:

So there will be no stamp duty to pay so long as the nominal sale price is kept to below 60,000.
Stamp duty is usually paid on just the actual transfer price whether that is fair market or not, but in the case of a gift of property with a mortgage, stamp duty is charged on an amount equal to half the mortgage, and if the mortgage is less than 60,000 there will still be no duty.
See: http://www.inlandrevenue.gov.uk/so/faqs.htm#13
On the ther hand, there will be a gift equal to the market value of the property minus whatever nominal price you receive, so there could still be IHT (estate tax) payable where the value of that gift element will be added back into your estate if you were to die within 7 years of the transfer. Of course, the way to beat that is to look after yourself :-)
Tony
the If you give the house

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wrote:

There will be no stamp duty to pay so long as the nominal sale price is kept to below 60,000.
Stamp duty is usually paid on just the actual transfer price whether that is fair market or not, but in the case of a gift of property with a mortgage, stamp duty is charged on an amount equal to half the mortgage, and if the mortgage is less than 60,000 there will still be no duty.
See: http://www.inlandrevenue.gov.uk/so/faqs.htm#13
On the ther hand, there will be a gift equal to the market value of the property minus whatever nominal price you receive, so there could still be IHT (estate tax) payable where the value of that gift element will be added back into your estate if you were to die within 7 years of the transfer. Of course, the way to beat that is to look after yourself :-)
Tony
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