CGT or letting my house to parents?

[jeffrey]

I think i'm writing some posts in this thread based on opinion (mine) rather than fact, and for that i do apologise. like i say, i do need to seek professional advice....
admittedly, i thought that if i gifted my house to my parents, and when i say gifted i mean transfer the title from my name to their name, then i would have to pay SDLT - but from what you say jeffrey this is not true?

Again (and have the cows come home, yet?):

TRANSFER BY GIFT (i.e. not in exchange for £££ or anything else) = NO SDLT.

Please write-out x100 (and see me after school if you still don't understand).

[Grange]

SDLT is payable at 0% on transactions up to 125,000. So yes, you can sell it to them for 100k.

(I suggested the loan to take it to 250k as you wanted to be able to take £400 per month from them without paying tax. It also leaves you owning a significant chunk of their assets if IHT rules change in the future, but not of their house, so any future gains are CGT free.)

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Edited thank you Jeffrey.

[jeffrey]

Er, it's £125 000 (or £150 000 in disadvantaged areas). The zero-rate applies up to and including the figure shown.

[ncooper1974]

I've just had a long chat to a tax consultant/advisor, and he thinks (like you probably all do) that i'm being over complicated and want to cover too many basis.

i also had an amusing chat with a solicitor last night saying i wanted to gift my parents my house, and he said its usually the other way round!

anway, i think the best way ahead for me in this situation is to keep the house in my name. I'll let my parents move in and draw up an agreement (see later in post). in return they will gift me £100k that i can use as a deposit for my new house. When they pass away, I'll then sell the house, and pay the CGT on whatever profit (less allowable expenses) that I make.

my 2 new questions therefore are:
1) what tenancy agreement can i give my parents. I want to give them security of tenure, and so want something that says they can live there for as long as they like, and not pay any rent.
2) if i'm not charging them rent (dont think its fair as they are giving me £100k up front) then would i still be allowed to offset any maintenance and repair costs in my self assessments?

[jeffrey]

Re question 1: what about a lease 'for life'? This would:
a. be a non-assignable leasehold;
b. reserve only a peppercorn rent;
c. create for a term of 90 years; and
d. include the right for you to terminate after the death of the survivor of them.

[Grange]

2) if i'm not charging them rent (dont think its fair as they are giving me £100k up front) then would i still be allowed to offset any maintenance and repair costs in my self assessments?

http://www.wealthandtrustee.co.uk/im.../march2007.pdf

See page 6.

where a property is let at a rate that is less than the
market rate they permit expenses to be deducted up to the value of the rent. This means that the expenses cannot create losses and excess expenses cannot be carried forward to be used in later years or set against the income from other properties in the rental business. If expenses exceed the rent for a property that is uncommercially let, the result is that the property produces neither a profit nor a loss. No relief is given for the excess expenses.

[ncooper1974]

Once again - thanks to you both for your reply.

Looks like i'll be giving them a lease for life then.

I only asked the question about the expenses as I have other properties which i claim allowances for, and didn't know how to treat this new one. Seems pretty clear cut to me!