Can anybody advise me please? Being self employed I had no accounts and couldnt get a mortgage so my parents bought a flat in their name and I live there and pay the mortgage and all the bills. It cost £33500 and the mortgage was for £25000. Now I am in a position to buy the flat and its current value is £60000. But I have been told that my parents cant sell it to me for £33500 and must sell it to me for its current value, £60000. But if they do this then I assume they will have to pay capital gains tax because they dont live there. Is there anyway to avoid this unjust tax? I have been told they can do one of two things 1. Remortgage to its current value of £60000 and then sell the flat to me. or 2. Separate and one of them move into the flat for some time and then sell the flat to me.
I'm no expert, but no, there shouldn't be any tax payable. They couldn't sell the property to you for the buying price because of inheritance tax issues, not capital tax. Although you can sell a property to anyone you wish for 1p but in some way you will get stung by the taxman.
If you sell to a child at under the value of the property then if they happen to die within 7 years there will be tax issues.
Best place to post this query is in the homes general forum. Loads of people there are pretty clued up.
Best of luck.
*It is not necessary to understand things in order to argue about them. -- Pierre De Beaumarchais
CGT threshold is nearer £8000-£8500 now I think. Don't forget that they each have an allowance they can utilise if the flat is in their joint names.So can make a gain of around £16000 before liable for CGT. With hind site it would have been better for you to get a 'guarantors' mortgage in your name with parents as quarantors. You would then be the owner/occupier and no tax liability would have been incurred.
