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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4996
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I was divorced in 2007, he got the pesnions and i got the property

Resolved Question:

I was divorced in 2007, he got the pesnions and i got the property I live in. I have worked very hard to reduce the mortgage on this and should pay it off very shortly. I am now considering moving in with my new partner. (I have no financial interest in his property). I want to help my son and his family. They have been living with me for some time as unbale to get a mortgage. I would like to allow him and his family to stay in the house. Can I sell it to him (in installments). I don't really want to rent it out to either him or others as I feel the tax would be difficult and will push meover the 40,000 limit. Can I be his mortgagor? Is there tax implications for this?
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Once you have paid off the mortgage, hopefully there would be no charge on the property.

As this is your main residence any gain from sale of it would be covered by private residence relief and exempt from capital gains tax.

There is no reason why you cannot sell the property to your son on instalments. Make sure you have a legal agreement drawn to protect you in the event there was a default in payments. You are effectively lending the money to him to be repaid over time. This notional loan can be with or without interest. If you decide to charge interest, then you should declare it as interest received and this amount would be chargeable to incoem tax.

I recommend you see a solicitor to draft the agreement and to complete transfer documentation.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Thank you that is very helpful. I have one more question. What happens in regard to stamp duty?

Expert:  taxadvisor.uk replied 3 years ago.
Theresa, thank you for your reply.

As there is a consideration (albeit payable in instalments), sale of property to your son will not be exempt from stamp duty land tax.

More information on this can be found here
http://www.hmrc.gov.uk/sdlt/intro/basics.htm

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes