Family buying your house

[Nutty_Death]

This is a tricky one.

If a family member was to buy your house from you in full with money that the parent had given them or the parent bought it and gifted the house to them. Essentially as a cash purchase not requiring a mortgage for the buyer, with the seller having a mortgage, which is a 1/5 of the sale price.

What would be the steps in doing this be? Legal things to look out for? expected taxes and ways of trying to reduce them legally? Official people to get involved and perhaps financial advisors?

 

[Nutty_Death]

Are they paying a representative market price?
If so, it's the same as any other sale iirc.

If not, it can become difficult.

Speak to a financial advisor I would say. There are lots of parts that will need to be carried out by a solicitor, and will have to he done properly to be legal.

Yes they are.
I've been wondering whether there's any legal ways to save taxes, such as transfering ownership. Which presumably couldn't be done without paying off the mortgage first and incurring some early repayment fees. Also I'm not sure how much money you can gift or what happens when a sibling gifts a house rather than parent.

 

[Nutty_Death]

Thanks, that's good to know. I do wonder whether that could affect the future value of the house but I guess future valuations would take into consideration surrounding houses.

It seems like you don't pay stamp duty on a transfer of ownership if you own all the house.

At normal market value, stamp duty works out about the same as paying off the mortgage early. So it seems taking 30% off the house price and therefore reducing stamp duty is the most cost effective method.