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

"Phil Norman" wrote in message
...
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

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

"Phil Norman" wrote in message
...
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



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

On Tue, 5 Aug 2003 14:22:34 +0100, "RichardS" noaccess@invalid
wrote:



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


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

To email, substitute .nospam with .gl

Andy Hall wrote:

On Tue, 5 Aug 2003 14:22:34 +0100, "RichardS" noaccess@invalid
wrote:



Don't think it's a solicitor that you want, but rather a good tax
accountant.
snip
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

Wait till you see the solicitors bill. In my experience they are very
good at charging everything that moves!
Richard

try uk.finance - there are some very helpful people in there !

"Phil Norman" wrote in message
...
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

Phil Norman wrote:

If anyone can help I would be most grateful.

I would echo what David said: Can't you give the house to your daughter,
and get her to give you 35K?

--
Ben Blaney
GSF1200 VFR800 CBR600 CD200
"We stopped only for fuel"

"Ben Blaney" wrote in message
...
Phil Norman wrote:

If anyone can help I would be most grateful.

I would echo what David said: Can't you give the house to your daughter,
and get her to give you 35K?

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.



---
Outgoing mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.488 / Virus Database: 287 - Release Date: 05/06/2003

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.

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.

"Christian McArdle" wrote in message
. net...

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,

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.


---
Outgoing mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.488 / Virus Database: 287 - Release Date: 05/06/2003

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.

But trying to evade the stamp duty is an offence.

Christian McArdle wrote:

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,

For what crime?

so it isn't possible to
just give stuff away, especially if there is some implied contract.

Contract law is different to criminal law.

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.

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

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.

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.

--
Ben Blaney
GSF1200 VFR800 CBR600 CD200
"We stopped only for fuel"

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,

For what crime?

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.

In article , Imm wrote:
Why not? You can sell anything you like for what price you like.

But the question was whether stamp duty would be charged on the price
actually paid or the market value. I suspect (IANAL) that as this is a
transaction between 'connected parties' the latter might be the case.

--
Tony Bryer SDA UK 'Software to build on' http://www.sda.co.uk
Free SEDBUK boiler database browser http://www.sda.co.uk/qsedbuk.htm

On Wed, 06 Aug 2003 11:23:34 +0100, Tony Bryer
wrote:

In article , Imm wrote:
Why not? You can sell anything you like for what price you like.

But the question was whether stamp duty would be charged on the price
actually paid or the market value. I suspect (IANAL) that as this is a
transaction between 'connected parties' the latter might be the case.


It certainly is for inheritance tax purposes. There are a whole
bunch of rules with time limits and property transfer comes especially
under scrutiny. It is possible to do asset transfers through the
medium of a company or business and enjoy 50 or 100% tax relief, but
only if the property was an asset of the business e.g. a premises from
which the transferor carried on another business. It doesn't apply
if the sole or main purpose of the business is property ownership and
management.

The whole area of IHT and stamp duty is a minefield. Apart from IHT
especially being completely iniquitous to begin with -the transferor
already paid income tax - the operation of the system is a mess.
Typically a bereaved person has to deal with with the incompetence of
the Inland Revenue at a time when they can least do with it.

I really don't see the basis for any form of taxation on asset
transfer between family members whether in life or at time of death.

It strikes me as an even bigger rip-off than National Insurance.




..andy

To email, substitute .nospam with .gl

Andy Hall wrote:

The whole area of IHT and stamp duty is a minefield. Apart from IHT
especially being completely iniquitous to begin with -the transferor
already paid income tax - the operation of the system is a mess.
Typically a bereaved person has to deal with with the incompetence of
the Inland Revenue at a time when they can least do with it.

I'm reluctant to muddy the water even further, but no one has
mentioned Capital Gains Tax so far. Couldn't this apply too in
some circumstances?

Nick

"Phil Norman" wrote in message
...
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.

I recommend talking to your local Citizens Advice Bureau.
Some of them do free 1/2 hour solicitors initial interview from volunteer
solicitors.
This should be long enough to establish if you are on dodgy ground.

Selling things at significantly less than their market value is not always
the clever wheeze it seems.
AFAIK it is generally treated as a sale at the current market value and a
gift of the money.

I suspect you may be liable for stamp duty at the current market value of
your house if you sell for an obviously trivial sum.
This would probably be viewed as deliberate tax evasion.

An outright gift may be free of tax (check), but would certainly figure in
any inheritance tax calculation if you (or your partner if the house is in
joint names) don't last the 7 years.

If something sounds like a really great way of avoiding paying tax (and you
aren't a millionaire industrialist) then the chances are someone else has
thought of it before and blocked the loophole. :-(

Cheers
Dave R

One thing you should avoid is passing the existing mortgage over to
her. If she needs a mortgage then she should get a new one. Not for
any legal reasons, but because I have just been jumping through that
particular hoop and regretted it. The building society (Halifax)
couldn't cope with such an unusual situation and took four months to
do the paperwork. As it happened, that didn't matter for me, but I
wouldn't go down that road again.

Anna
--
~~ Anna Kettle, Suffolk, England
|""""| ~ Pargeting, decorative and traditional
/ ^^ \// lime plasterwork
|______| www.kettlenet.co.uk 07976 649862

There are all sorts of pitfalls and the stamp duty will have to be paid on
the open market value. In order to minimise the costs and make the best use
of the tax exemptions that are available you must use a solicitor. His fees
will far outweigh the savings you might imagine you could make by DIY ing
it. Should not cost more than a few hundred pounds. They can also deal with
the conveyance that will be needed at the same time. The new building
society will probably insist on the searches being done anyway. You will be
VERY ill advised if you act on such a transaction without professional help.
IANAL but have been involved in a similar transaction.

Correction! Not on open market value.

On Tue, 5 Aug 2003 13:44:59 +0100, "Phil Norman"
wrote:

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.

We did this exactly this about a year ago, the solicitor and IR were
quite happy that no stamp duty was due as the transaction was 35k.
The seller had to sign something saying he wasn't going to be declared
bankrupt, and there would be Inheritence tax implications subject to
death in the next 7 years and large estates, otherwise no problem.

Jim.

"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
7 years before your eventual demise.

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

Owain wrote:

"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
7 years before your eventual demise.

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.


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.

Owain

On Tue, 5 Aug 2003 13:44:59 +0100, "Phil Norman"
wrote:

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.

How about she buys 35/150ths of the place for now?

"Neil Jones" wrote in message
...
On Tue, 5 Aug 2003 13:44:59 +0100, "Phil Norman"
wrote:

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.

How about she buys 35/150ths of the place for now?


Might be complicated legally, but it sounds like a possibility. Having to
have a building society involved could prove awkward though.