XMA5 Posted May 10, 2006 Share Posted May 10, 2006 Sorry if this is a little off topic, I am hoping to give my house to my mum, and she is hoping to give her house to me they are both worth about 300K. can we aviod stamp duty, neither house has a mortguage? Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted May 10, 2006 Share Posted May 10, 2006 Yes, just sell them to each other for a pound. Quote Link to comment Share on other sites More sharing options...
Guest Guy_Montag Posted May 10, 2006 Share Posted May 10, 2006 Yes, just sell them to each other for a pound. I'll give you two pounds for it. Quote Link to comment Share on other sites More sharing options...
New Darker Law Posted May 10, 2006 Share Posted May 10, 2006 Yes, just sell them to each other for a pound. I have to say TTRTR, you normally provide good answers to queries on the intricacies of owning houses, but I think you are being sarcastic here? Surely the taxman would look at the market value rather than the actual consideration being paid? Of course this ignores the fact that these are identically valued assets and you could argue that nobody is being advantaged. I still think stamp duty may apply though. Anybody else? NDL Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted May 10, 2006 Share Posted May 10, 2006 Speak to a solicitor. Won't cost you much considering! Quote Link to comment Share on other sites More sharing options...
Immigrant Posted May 10, 2006 Share Posted May 10, 2006 Sorry if this is a little off topic, I am hoping to give my house to my mum, and she is hoping to give her house to me they are both worth about 300K. can we aviod stamp duty, neither house has a mortguage? What on earth is the point of this? Why not just keep them in your own names? Quote Link to comment Share on other sites More sharing options...
Katherine Posted May 10, 2006 Share Posted May 10, 2006 What on earth is the point of this? Why not just keep them in your own names? I am thinking what is the point too!! You will have to register the transaction with the Land Registry and that means attracting stamp duty, even if you are selling for nominal consideration i.e a pound as stamp duty is charged on market value not sale price. Probably you will have to pay solicitors fees and then there could be an issue with regard to capital gains - don't know for sure. Sounds a mad scheme to me. Quote Link to comment Share on other sites More sharing options...
Guest muttley Posted May 10, 2006 Share Posted May 10, 2006 Sorry if this is a little off topic, I am hoping to give my house to my mum, and she is hoping to give her house to me they are both worth about 300K. can we aviod stamp duty, neither house has a mortguage? Is no-one going to state the obvious? Wait 18 months and the properties won't attract stamp duty at all!! You guys are slow tonight. ( Removes tongue from cheek ) Quote Link to comment Share on other sites More sharing options...
XMA5 Posted May 10, 2006 Author Share Posted May 10, 2006 Is no-one going to state the obvious? Wait 18 months and the properties won't attract stamp duty at all!! You guys are slow tonight. ( Removes tongue from cheek ) Thanks for your replies guys, if we did not change the names and ma goes ga ga and off to nursing home then i will lose the house as she is the owner.( i plan an extenstion/update etc that will make the house worth easily 500k What happens in 18 months tha stamp duty will not be payable ? Quote Link to comment Share on other sites More sharing options...
Jason Posted May 10, 2006 Share Posted May 10, 2006 What happens in 18 months tha stamp duty will not be payable ? House prices will crash. lol. I'm not sure what's stopping you selling the house for £124,999 to avoid stamp duty - but i'm sure Gordon Brown will object. You'll probably find it needs to be a 'fair price'. Go ask a solicitor, and let us know the legal answer as i'm interested! Quote Link to comment Share on other sites More sharing options...
XMA5 Posted May 10, 2006 Author Share Posted May 10, 2006 House prices will crash. lol. I'm not sure what's stopping you selling the house for £124,999 to avoid stamp duty - but i'm sure Gordon Brown will object. You'll probably find it needs to be a 'fair price'. Go ask a solicitor, and let us know the legal answer as i'm interested! It's funny that i have posed the question with 2 soliciters they have had a few days and are yet to come back to me, i suspect that they themselves have been posting on forums. The first was initially yes you must pay it and the sale and purchase fees, plus vat, All very nice for them but a bit like an overpaid taxi driver. i want the shortest cheapest route ( in mr Sugars words )" not the most bleedin' expensive,come here p** my money up the wall" Quote Link to comment Share on other sites More sharing options...
devils advocate Posted May 10, 2006 Share Posted May 10, 2006 Stamp duty is payable on the arms length market value at the time of transfer. So with such a swap you'll be hit for 2 lots. However, if your aged relative does have to go in to a nursing home, the local council may look to unwind the transaction if they think that your mother has entered into it to avoid her obligations to them in respect of the fees. Were this to happen, the worst possible case is that the gift to you would be unwound and you wouldn't get the stamp duty back! But there again , if 2 shags doesn't have to pay taxable benefit on his love nest in Admiralty Arch, and his country retreat, despite not having a real job, you might also get away with it. (at least when 2 shags was a waiter, he could justify the free accommodation as being necessary for the performance of his duties and thus legitimately not get taxed on it). Quote Link to comment Share on other sites More sharing options...
AFineMess Posted May 10, 2006 Share Posted May 10, 2006 I have to say TTRTR, you normally provide good answers to queries on the intricacies of owning houses, but I think you are being sarcastic here? Surely the taxman would look at the market value rather than the actual consideration being paid? Of course this ignores the fact that these are identically valued assets and you could argue that nobody is being advantaged. I still think stamp duty may apply though. Anybody else? NDL Surely no one can tell you what to sell your house for. There is no house price police. You won't get arrested if you decide you want to sell your house for much less than its worth to someone else. How could they determine that? So yes, sell both for £1. (It'll also have a very nice effect on the mean house prices in the area!) Having said that, I'm now unsure if that doesn't open up some kind of inheritance loophole... surely no one can prevent you from selling something at any price you choose? Quote Link to comment Share on other sites More sharing options...
Katherine Posted May 10, 2006 Share Posted May 10, 2006 Stamp duty is payable on the arms length market value at the time of transfer. So with such a swap you'll be hit for 2 lots. However, if your aged relative does have to go in to a nursing home, the local council may look to unwind the transaction if they think that your mother has entered into it to avoid her obligations to them in respect of the fees. Were this to happen, the worst possible case is that the gift to you would be unwound and you wouldn't get the stamp duty back! But there again , if 2 shags doesn't have to pay taxable benefit on his love nest in Admiralty Arch, and his country retreat, despite not having a real job, you might also get away with it. (at least when 2 shags was a waiter, he could justify the free accommodation as being necessary for the performance of his duties and thus legitimately not get taxed on it). Stamp duty is payable on valuation by a surveyor i.e. value of the property for mortgage purposes. For example I bought mine at undervalue but full stamp duty would have been payable (value of property £150,000 paid £115,000) except its in a stamp duty exempt area. In relation to the care fees that's a total no-no as your mother would be viewed as having "deliberately deprived herself of an asset" in order to avoid fees. Even transactions which took place as long ago as 20 years can be accounted for. Surely no one can tell you what to sell your house for. There is no house price police. You won't get arrested if you decide you want to sell your house for much less than its worth to someone else. How could they determine that? So yes, sell both for £1. (It'll also have a very nice effect on the mean house prices in the area!) Having said that, I'm now unsure if that doesn't open up some kind of inheritance loophole... surely no one can prevent you from selling something at any price you choose Yes of course you can sell your house for what you want but you can expose yourself to liabilities - stamp duty and capital gains for example. Also with regard to inheritance tax, my understanding is say you buy your mum's house worth £200,000 and you buy it at undervalue of say £100,000 and your mum dies within seven years that £100,000 undervalue falls subject to inheritance taxes which can be held against the undervalue part of the property. The way to avoid this is for your mum to take out a small insurance policy cost of which is about £100 which indemnifies her should this happen and whoever bought the property at undervalue is protected from an inheritance tax claim. Quote Link to comment Share on other sites More sharing options...
AFineMess Posted May 10, 2006 Share Posted May 10, 2006 Stamp duty is payable on valuation by a surveyor i.e. value of the property for mortgage purposes. For example I bought mine at undervalue but full stamp duty would have been payable (value of property £150,000 paid £115,000) except its in a stamp duty exempt area. In relation to the care fees that's a total no-no as your mother would be viewed as having "deliberately deprived herself of an asset" in order to avoid fees. Even transactions which took place as long ago as 20 years can be accounted for. But there is no mortage on either property, according to the original poster. When people negotiate a house price under the £250,000 barrier, they don't have to pay the additional duty, even though the original valuation by the surveyor may have been higher. That's the whole point of negotiating lower in that case... I'm assuming that I'm missing something here.... anyone else? Quote Link to comment Share on other sites More sharing options...
Katherine Posted May 10, 2006 Share Posted May 10, 2006 But there is no mortage on either property, according to the original poster. When people negotiate a house price under the £250,000 barrier, they don't have to pay the additional duty, even though the original valuation by the surveyor may have been higher. That's the whole point of negotiating lower in that case... I'm assuming that I'm missing something here.... anyone else? by survey for mortgage purposes I simply meant a valuation report......this would have to be done to calculate the amount of duty payable. Property transfer is a minefield and its not something to be done lightly. Quote Link to comment Share on other sites More sharing options...
AFineMess Posted May 10, 2006 Share Posted May 10, 2006 Also with regard to inheritance tax, my understanding is say you buy your mum's house worth £200,000 and you buy it at undervalue of say £100,000 and your mum dies within seven years that £100,000 undervalue falls subject to inheritance taxes which can be held against the undervalue part of the property. The way to avoid this is for your mum to take out a small insurance policy cost of which is about £100 which indemnifies her should this happen and whoever bought the property at undervalue is protected from an inheritance tax claim. Interesting, thanks. Do you have any links you can share about this potential retrospective liability? Quote Link to comment Share on other sites More sharing options...
Katherine Posted May 10, 2006 Share Posted May 10, 2006 Interesting, thanks. Do you have any links you can share about this potential retrospective liability? First hand experience!!!! I've bought my parents house at undervalue and their solicitor advised them to indemnify themselves against such an eventuality the price of the policy is pretty fair compared to the potential liability. I think it was just under £100 in fact. To be strictly honest as I benefit I should have paid the policy not them..... Quote Link to comment Share on other sites More sharing options...
uro_who Posted May 10, 2006 Share Posted May 10, 2006 (edited) One of the guys I work with was telling me that he was involved in a chain with 4 people. They actually all swapped houses and moved the money around without paying stamp duty. He actually paid the people that moved into his house! Oh yes and they were all solicitors apart from him. No stamp duty paid. Edited May 10, 2006 by uro_who Quote Link to comment Share on other sites More sharing options...
AFineMess Posted May 10, 2006 Share Posted May 10, 2006 First hand experience!!!! I've bought my parents house at undervalue and their solicitor advised them to indemnify themselves against such an eventuality the price of the policy is pretty fair compared to the potential liability. I think it was just under £100 in fact. To be strictly honest as I benefit I should have paid the policy not them..... I wonder if you can get an insurance policy against negative equity over the next few years... If house prices are going to keep on rising like everyone says, it should be pretty cheap Quote Link to comment Share on other sites More sharing options...
Katherine Posted May 10, 2006 Share Posted May 10, 2006 One of the guys I work with was telling me that he was involved in a chain with 4 people. They actually all swapped houses and moved the money around without paying stamp duty. He actually paid the people that moved into his house!Our yes and they were all solicitors apart from him. No stamp duty paid. its not possible. You have to register the conveyance with the Land Registry to prove ownership and file a SDLT form (stamp duty land tax) its illegal not to do this and if you can't prove ownership your asset is not worth anything to you. Quote Link to comment Share on other sites More sharing options...
delboypass Posted May 10, 2006 Share Posted May 10, 2006 Thanks for your replies guys, if we did not change the names and ma goes ga ga and off to nursing home then i will lose the house as she is the owner.( i plan an extenstion/update etc that will make the house worth easily 500k What happens in 18 months tha stamp duty will not be payable ? totally AWOOGA everything he says sounds very very suspect Quote Link to comment Share on other sites More sharing options...
XMA5 Posted May 11, 2006 Author Share Posted May 11, 2006 Thanks for the advice, i wa thinking of the undervalue route but thought this is fraud, and therefore illegal, Although from reading above it has been done. Quote Link to comment Share on other sites More sharing options...
enworb Posted May 11, 2006 Share Posted May 11, 2006 Your Mother can give you somewhere around 7K per yer tax free no questions asked. If she remortgages the house and uses the equity to pay, all she has to do is get the value of the house lower than the inheritance threshold, roughly £280K. When you dear Mum's time is up, you'll get her house tax free. There might even be a possibility that you Mother can give you the house as long as she stays alive for 7 years. I'm quite sure of the 7 year rule but not the value of the asset that she can give to a son or daughter.This rule is a once in a lifetime opportunity. Check a search engine with the words "inheritance tax" and you should find a decent site with all the fact. Remortgaging would be expensive but you'd end up with both houses Good luck. Quote Link to comment Share on other sites More sharing options...
XMA5 Posted May 11, 2006 Author Share Posted May 11, 2006 Like the idea of a Labour MP will suggest it,just need a few backers and a couple of jags and we're away anyway had this from the powers that be as a suggested scheme to avoid the duty. because you are related to your mother, this is classed as a linked transaction under the Finance Act S108, and therefore stamp duty is payable on the aggregate value of the two properties, ie if £300,000.00 each, then stamp duty is payable on the aggregate value of £600,000.00 at 4% meaning that your mother would have to pay £12,000.00 and you would have to pay £12,000.00 Nice idea i really like lets pay as much as i possiblely can and the country will get back on its feet again. as my mum will be PM it will be free beer on tuesdays too. Quote Link to comment Share on other sites More sharing options...
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