Hi again.CAPITAL GAINS TAXAs you and your son are "connected persons", you will be treated as having sold the property at its full market value for Capital Gains Tax purposes so you will have have a gain of about £80,000, £40,000 for each part owner. Assuming this property was never your main home, the only deduction you will qualify for will be the annual CGT exemption of £11,000 so you will each have a taxable gain of £29,000. There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay CGT at will be dependent on the sum of your individual incomes and your respective shares of the net taxable gain. The mortgage is irrelevant as far as CGT is concerned.INHERITANCE TAXThe difference between the market value of the property and what your son pays for it will be a gift for Inheritance Tax purposes. So long as you live for at least seven years after making the gift, it will not form part of your respective estates for IHT purposes.
STAMP DUTYTake a look under the heading "Receiving land or property as a gift or from a will" here.If you sell the property for £100,000, there will be no stamp duty as the cash consideration will be less than £125,000, notwithstanding the fact that the property is worth £200,000.I hope this helps but let me know if you have any further questions.
Thanks, ***** ***** Shame, isn't it.
How would we assess the value for CGT purposes? Do we have to show some specific form of evidence?
My son will be getting a mortgage - will the value placed on by the bank be the official value?