My son wants to buy my house in Manchester. A surveyor has valued it at £500,000, and I am happy to loan him £200,000 until he sells, or I need the money. He has about £50,000 and will need a mortgage for the rest (he has an income of over £50,000 per annum). What is the best way to proceed for tax purposes?
Arthur Weller replies:
However much he pays you for the house, for capital gains tax (CGT) purposes, you are deemed to transfer to him at today’s market value, pursuant to HMRC’s Capital Gains manual at CG14530. However, if you have always lived in the house as your main residence, this will not trigger any CGT for you. But he will need to pay stamp duty land tax (SDLT) based on the amount he actually pays you. See HMRC’s Stamp Duty Land Tax manual at SDLTM00055 for how much SDLT he will have to pay. It will probably be to his advantage if completion is before 30 June 2021. He may also be eligible for SDLT first time buyer’s relief, as can be seen in HMRC’s SDLT for first time buyers guidance note.