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  #1   Report Post  
Phil Norman
 
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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


  #2   Report Post  
David Hearn
 
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"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


  #3   Report Post  
RichardS
 
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"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


  #4   Report Post  
NC
 
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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




  #5   Report Post  
Ben Blaney
 
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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"


  #6   Report Post  
IMM
 
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"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.



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  #7   Report Post  
Christian McArdle
 
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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.


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.


  #8   Report Post  
David W.E. Roberts
 
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"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


  #9   Report Post  
Anna Kettle
 
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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
  #10   Report Post  
IMM
 
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"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.


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  #11   Report Post  
Ben Blaney
 
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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"
  #12   Report Post  
Peter Crosland
 
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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.


But trying to evade the stamp duty is an offence.


  #13   Report Post  
Peter Crosland
 
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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.



  #14   Report Post  
Jim Ley
 
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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.
  #15   Report Post  
Peter Crosland
 
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Correction! Not on open market value.





  #16   Report Post  
Andy Hall
 
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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
  #17   Report Post  
IMM
 
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"BillR" wrote in message
...
Simon Gardner wrote:
In article ,
"IMM" wrote:

"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.


Not quite with houses.

That is if you sold the house for less than the market value without
paying the stamp duty *for the real market value* you would be
evading tax. The details of all sales go to the District Valuer who
alerts the Revenue to anything suspicious. He is paid to know the
market value of property on his patch. Nobody particularly minds if
you 'sell the house for what price you like' but the Revenue mind
very much you thereby evading stamp duty.

I know of 2 flats that have been sold for just under the 250k threshold.
They were worth over 300k. In both cases the differences were made up by
payments for "fixtures & fittings".
I suspect that if was a grosser difference between the purchase price &
market value, the authorities will take an interest.


How much is stamp duty?


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  #18   Report Post  
Andrew McKay
 
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On Tue, 5 Aug 2003 21:15:43 +0100, "IMM" wrote:

Firstly, they have to prove it. Secondly, it is not an offence to sell at
what you agree a price on.


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

Do you need a handyman service? Check out our
web site at http://www.handymac.co.uk
  #19   Report Post  
Peter Crosland
 
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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.



  #20   Report Post  
IMM
 
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"Peter Crosland" wrote in message
...

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.


If they want to tax then they tax. Prosecute? For using the free market?


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  #21   Report Post  
Phil Norman
 
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Hello again

Well I seem to have stirred up a bit of a hornets nest with my question
about Stamp Duty. I am very impressed with how helpful everyone is trying to
be, and have found the replies to be fascinating as well as informative.

Can I clarify one or two points in my original post which have caused some
confusion and sent a few people in the wrong direction. Firstly, as things
stand at present, there are no Inheritance Tax implications. If I died
tomorrow, my estate would be well short of the threshold for that - and
anyway in the event that I suddenly became richer, and my wife and I both
died within the next seven years, I am quite prepared to make a declaration
so that the full market price of the property comes back into the
Inheritance Tax equation. Secondly, the purpose of the exercise outlined in
my OP is not entirely as I explained - but there is no attempt on my part to
evade tax. I will explain more fully.

The real reason why I wish to sell my house to my daughter in this manner
is, because of a change of circumstances, I find myself in rather a
difficult position - I am struggling to pay my mortgage. By modern standards
I have a relatively small mortgage, but because of my age (middle 50s) it
is payable over a much shorter period than usual - and, consequently, the
monthly payments are correspondingly high. One solution I thought would be
to sell the property to my daughter for £35,000, sufficient to clear the
mortgage - much more than this figure and she would struggle herself to meet
the monthly payments (with her other commitments - student loan repayment,
rent on flat, etc). As I said previously, she will inherit the house one day
anyway - but obviously not if we lose it ourselves. She does not own any
other property, and neither do I. What I said about my wife and I moving to
another house is not untrue, but we would not be able to do this for at
least a year. In the meantime we would probably stay where we are - paying a
small rent.

Obviously this whole project would be pointless if we have to involve
ourselves in expenses of probably several thousands of pounds in Stamp Duty,
surveys, searches, etc. Hence my question.


Regards

Phil




  #22   Report Post  
Ben Blaney
 
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Andrew McKay wrote:

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.


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.

--
Ben Blaney
GSF1200 VFR800 CBR600 CD200
"We stopped only for fuel"
  #23   Report Post  
Richard
 
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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
  #24   Report Post  
L Reid
 
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How much is stamp duty?

1% under £250 IIRC


  #25   Report Post  
L Reid
 
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No, sorry, I can't see that. I bought a house advertised at £62500. the
seller was keen to sell and I was keen to avoid stamp duty so I offered
£59950 he accepted. No stamp duty was paid and no taxman came a knocking.
What's the problem with that? It happens all the time


Indeed if you had a good sols, and got some 'extra bits and bobs' I suspect
you could have knocked the value for the house under £60K anyway and said
£2501 was for the fixtures (fridge/ wmachine ect). Paying £59950 for a house
advertised at £62500 is within the realms of possibility, paying £35K for a
house worth 3 to 4 times that isn't. I take it the property isn't in a
deprived area? Would be exempt up to £150K then.




  #26   Report Post  
Andrew McKay
 
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On Tue, 5 Aug 2003 22:27:38 +0100, "IMM" wrote:

If they want to tax then they tax. Prosecute? For using the free market?


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

Do you need a handyman service? Check out our
web site at http://www.handymac.co.uk
  #27   Report Post  
Andrew McKay
 
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On Wed, 6 Aug 2003 00:23:21 +0100, "IMM" wrote:

1% under £250 IIRC


And above?


http://www.netaccountants.com/stamp.html

Can't you guys use a search engine?

Andrew

Do you need a handyman service? Check out our
web site at http://www.handymac.co.uk
  #28   Report Post  
Christian McArdle
 
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Obviously this whole project would be pointless if we have to involve
ourselves in expenses of probably several thousands of pounds in
Stamp Duty, surveys, searches, etc. Hence my question.


There may be issues if you are subsequently found bankrupt, as the disposal
of the property below true value may be illegal if you are doing it to
shield your assets from your creditors. It is illegal to give your
possessions to your family, be made bankrupt and then have it gifted back.
Not that every famous person in difficulties hasn't tried it.

Given that you will be living in the house after the transaction, it may
well attract attention that the deal is not what it seems. If you are likely
to need long term care or income support, they might be extremely suspicious
that you are artificially disposing of property to maximise your claim.

This situation is too involved to diy. You may get a more knowledgable
response in uk.legal.

Christian.



  #29   Report Post  
Tony Bryer
 
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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


  #30   Report Post  
stuart noble
 
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Phil Norman wrote in message ...
Hello again

Hi Norman
The idea that you're doing something previously unheard of and that you'll
need all kinds of accountants and solicitors is faintly ridiculous. Go to
the horse's mouth and talk to the Inland Revenue. They probably have a
leaflet covering your situation or it'll be the tenth time they've been
asked the question that day. Why use middle men?




  #31   Report Post  
Andrew
 
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"Essjay001" wrote in message ...
Simon Gardner wrote:

That is if you sold the house for less than the market value without
paying the stamp duty *for the real market value* you would be
evading tax. The details of all sales go to the District Valuer who
alerts the Revenue to anything suspicious. He is paid to know the
market value of property on his patch. Nobody particularly minds if
you 'sell the house for what price you like' but the Revenue mind
very much you thereby evading stamp duty.

No, sorry, I can't see that. I bought a house advertised at £62500. the
seller was keen to sell and I was keen to avoid stamp duty so I offered
£59950 he accepted. No stamp duty was paid and no taxman came a knocking.
What's the problem with that? It happens all the time


Because it would be impossible to prove you were evading tax rather
than negotiating a fair price. Selling a £220k house for £35k is
pretty obvious and the OP's intentions are now documented in this
newsgroup thread. Lets hope no one from the IR is reading!

Andrew
  #32   Report Post  
Tony Hogarty
 
Posts: n/a
Default Stamp Duty

IMM wrote:


"Peter Crosland" wrote in message
...

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.


Firstly, they have to prove it. Secondly, it is not an offence to sell at
what you agree a price on.


Are you being deliberately as thick as **** or are you always like this?
I've had enough of your ramblings so its time for IMM to hit the kill
filter.
--
Regards

Tony Hogarty
(take out garbage to reply)
  #33   Report Post  
IMM
 
Posts: n/a
Default Stamp Duty


"Tony Hogarty" wrote in message
...
IMM wrote:


"Peter Crosland" wrote in message
...

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.


Firstly, they have to prove it. Secondly, it is not an offence to sell

at
what you agree a price on.


Are you being deliberately as thick as **** or are you always like this?
I've had enough of your ramblings so its time for IMM to hit the kill
filter.


It is plain you are a fool. Put me on your killfile .


---
--

Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.507 / Virus Database: 304 - Release Date: 04/08/2003


  #34   Report Post  
John Rumm
 
Posts: n/a
Default Stamp Duty

Peter Crosland 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?



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.


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.


--
Cheers,

John.

/================================================== ===============\
| Internode Ltd - http://www.internode.co.uk |
|-----------------------------------------------------------------|
| John Rumm - john(at)internode(dot)co(dot)uk |
\================================================= ================/

  #35   Report Post  
RichardS
 
Posts: n/a
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"John Rumm" wrote in message
news
Peter Crosland 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?



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.


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.




Yes, on the face of it this is true.

The OP has stated his reasons for the transaction, motivation being a desire
to help out his daughter and not to evade stamp duties, inheritance taxes,
put assets out of reach of creditors, etc.

In a free market transaction with unconnected parties and no linked
transactions or future use of the house then there should be no problems
(however, IANAL and don't know the details of the various acts that cover
Stamp Duty).

However, this does not seem to be an arms-length transaction, and as such
there are probably a myriad of laws governing such matters. A solicitor
shoudl be able to give chapter and verse on the Stamp Duty liablility, but a
good tax accountant should be able to advise on other pitfalls as well.

Transactions (especially involving land and families) are not always as
straightforward as they might seem to the layman.

cheers
Richard

--
Richard Sampson

email me at
richard at olifant d-ot co do-t uk




  #36   Report Post  
Andy Hall
 
Posts: n/a
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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
  #37   Report Post  
Andy Hall
 
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On Wed, 6 Aug 2003 11:48:22 +0100, "stuart noble"
wrote:


Phil Norman wrote in message ...
Hello again

Hi Norman
The idea that you're doing something previously unheard of and that you'll
need all kinds of accountants and solicitors is faintly ridiculous. Go to
the horse's mouth and talk to the Inland Revenue. They probably have a
leaflet covering your situation or it'll be the tenth time they've been
asked the question that day. Why use middle men?


Because most people at the IR that you will typically reach are
clueless on anything much more than self-assessment. If you ask
something about CGT, even relatively simple, they don't know.
Inheritance tax? Forget it.

The leaflets cover only a tiny amount of the most widely used tax
legislation.

If you want to get into the subtleties of CGT, IHT or even stock
options you can research it yourself since most of the legislation can
be found on the IR web site. However, much of it is obscurely
written and non-obvious as to whether it applies in a given situation.

My accountant tells me that more often than not in these cases he has
to point the officer to the legislation that applies and then get them
to agree (in writing) that it is applicable to a case in point.
There is plenty there for tax saving, but the layman won't find it for
himself.




..andy

To email, substitute .nospam with .gl
  #38   Report Post  
Nick Nelson
 
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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
  #39   Report Post  
Meoww
 
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Default Stamp Duty

"Phil Norman" wrote in message ...
Hello again


snip

Obviously this whole project would be pointless if we have to involve
ourselves in expenses of probably several thousands of pounds in Stamp Duty,
surveys, searches, etc. Hence my question.


Regards

Phil


Without wishing to get involved in the issue of stamp duty which may
or may not be payable (IANAL), and whilst suggesting that you see a
solicitor on a 'first fifteen minute freebie' to find out, it maybe
worth your while selling the house to your daughter for the maximum
amount she can borrow and maybe consolidating her other debts.

Her repayments on the mortgage would probably be less than her
accumulated outgoings at the moment and with the amount of equity
available in the property this may well be the answer to your problem.

Of course this is speaking from the point of view of someone who
doesn't know your daughter's financial circumstances. Often though,
when you have a problem like this, it can be worthile to try and think
that 'little bit bigger' than the immediate circumstances. It's been
the downfall of many a person to borrow too little as opposed to too
much.

If for instance she acquired a 40k mortgage and then had no other
outgoings, would this help? If so,you could pay the stamp duty for her
out of the proceeds of the sale.

Whatever you do, do this via a lawyer, have the searches done and get
it right. The few hundred pounds you might save on a diy conveyance
are just not worth it. Your daughter will need a solicitor too
otherwise the B.S. won't go along with anything!

HTH

Patrick

p.s. also visit a mortgage broker. You'll be amazed at the deals on
offer which might help you. Best of luck.
  #40   Report Post  
Owain
 
Posts: n/a
Default Stamp Duty

"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




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