Property purchase and gifting straight after

  • Filter
  • Time
  • Show
Clear All
new posts

    Property purchase and gifting straight after

    I would be grateful if someone could help whether this is at all legally feasible. My long-term partner and I would like to buy an investment property. We've saved up for a long time and now have funds to make a cash purchase (just under 200K). We already own our own home so would have to pay the higher SDLT. Whilst chatting to the estate agent he sort of suggested a way where we can get round it perfectly legally. As my elderly mother (perfectly fit and healthy) lives with us and she has never owned a property (always rented), he suggested that she could buy it (1st time buyer so no SDLT applies), and then almost immediately gifts it to us both. There will be no CGT for her as the property value hasn't increased in 1day-1week. Non-mortgaged outright property gifts ("without consideration" - legal jargon) do not attract SDLT for the gift recipient (us). We then become legal owners of the house and could potentially take out a Buy-To-Let mortgage against it to release some equity for future investments. The IHT is not an issue as that would be her only asset should she (god forbid) pass within the next 7 years and its well under £325K threshold.

    When I spoke to the solicitor about doing this - he sighed heavily and said that it sounded very complicated. I got the impression that he didn't know whether this was right or wrong or have even come across this situation before.

    Could somebody with tax/legal knowledge advise.

    Many thanks.

    And how exactly is the mother going to be paid for the gift? Are you planning to give her a gift in return?


      You're going to "gift" your mother £200k.
      She's going to buy a property (which you will select) for £200k and then "gift" it to you.

      As long as noone dies in the next seven years that's probably legal and tax efficient.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


        But I guess the question is whether HMRC will see it that way. Because you could do it with almost any transaction to save all sorts of tax (in addition to SDLT).

        Don't get a salary - Work for free and then boss gives you a gift

        Buy a house - why pay for it? The seller will gift it to you, and then you will give them a gift.

        Paying a tradesman to avoid (his) VAT - why bother with the usual type of scam which carries risk. Tradesman works for free. Then give him a gift.

        I think it will be seen by HMRC as a "negotiated transaction" - in much the same way that some barter becomes normal income.

        Further, even if it works the 7 year rule is unlikely to be revoked retrospectively, but IHT rates and threshold can certainly change - let us suppose Corbyn gets in, the country is bankrupt, and the threshold for paying inheritance tax at 90% falls to 100K - there might be a saving of 6K on stamp duty replaced by a hefty inheritance tax bill.

        If OP were to die within 7 years up to 40% of that gift will also be payable to HMRC.

        Of course OP could hide what he is doing, but that is not what we are discussing here. I suspect if HMRC were to be told they would not be impressed. So I think the real answer is for the OP to pass it by them and see what they say of the planned arrangement -- but I suspect he is not planning to do that......


          Thank you for your input and opinions, appreciate it. I've made an appointment with a tax planning accountant to discuss this.


          Latest Activity


          • New to Renting out my property - Some tax questions
            by mucker973
            Hi All,
            I have a property I used to manage myself. The tenant paid me directly and I never declared it with the taxman. Going forward I have decided to use a letting agent to manage all of this. I currently reside abroad and when filling in the forms there is question which essentially is asking...
            24-06-2022, 07:39 AM
          • Reply to New to Renting out my property - Some tax questions
            by DoricPixie
            Your tax situation in Australian depends on whether you’re a permanent resident/citizen or a temporary resident. If you’re a temporary resident you find yourself in tax sweet spot where HMRC doesn’t care about your Australian income and assets and the ATO doesn’t care about your UK income and...
            24-06-2022, 14:29 PM
          • Reply to New to Renting out my property - Some tax questions
            by Gordon999
            If you are living overseas, you must register as a non-resident landlord using NRL1 form to Tax Office if you receive rental income from a UK property. If you don't register , the letting agent is required to deduct 25% tax on any rental money paid to you.

            After being registered...
            24-06-2022, 09:31 AM
          • Reply to New to Renting out my property - Some tax questions
            by jpkeates

            There's a "not quite an amnesty" operating at the moment.
            24-06-2022, 09:02 AM
          • Reply to New to Renting out my property - Some tax questions
            by mucker973
            Thanks JPkeates, I knew you'd know!

            I've been thinking of reporting it for a while. If I declare these past "earnings" do you think I'll just have to pay the tax (if there is any) or do you think there will be any penalties? Penalties are usually applied when you are caught out...
            24-06-2022, 08:47 AM
          • Reply to New to Renting out my property - Some tax questions
            by jpkeates
            I don't know what the situation is with Australian tax on UK rented property, and you'd probably better enquire locally.

            There are two different things to address.
            If you've been receiving income and not declaring it, you need to own up and pay what you owe - which sounds like nothing...
            24-06-2022, 08:32 AM
          • Reply to New to Renting out my property - Some tax questions
            by Covent Garden Girl
            Your questions are more complicated than you imagine.

            1) Yes, firstly as a non resident landlord, the agent or indeed tenants have to deduct tax at source, or you have to send off a form, but also wait for HMRC to send confirmation that they think it is okay for you not to have the tax...
            24-06-2022, 08:17 AM
          • Are utility bills tax-deductible?
            by Bigpat
            I've had a buy-to-let on a standard Assured Shorthold Tenancy for a few years and my tax return has been pretty simple. But since last year I have also had two lodgers, staying with me at my own residential property. Now I have purchased a small additional property, which I have moved into myself and...
            21-06-2022, 14:26 PM
          • Reply to Are utility bills tax-deductible?
            by jpkeates
            Even if you don’t need a licence, managing an HMO can be quite onerous. You’ll need a fire risk assessment, and then to comply with its requirements as a first step.

            That usually means fire retardant doors, different door locks, hard wired fire and smoke and heat alarms for a start....
            24-06-2022, 07:08 AM
          • Reply to Are utility bills tax-deductible?
            by Bigpat
            Thanks. Yes I checked the local authority who said that only "large" HMOs have to be licensed, and that counts as 5 or more tenants.

            I had no idea that separate TV licences would be required. How do HMO landlords usually handle this?
            (a) should I purchase three additional...
            23-06-2022, 21:38 PM