Selling process - Stage 7 - Exchanging contracts on property and completing

Gifting property to children is becoming more and more commonplace. As the price of property climbs ever higher, this is one solution families are using to get their children onto the property ladder. There are tax implications, however, and it may not be the solution to all your financial issues. Here we look at what happens if you decide to sell your property to a family member for a nominal value. Is this the same as gifting property to children? Yes. Although it will still require conveyancers to handle the legal aspects, the change in ownership will qualify as a gift. Legally it won’t be regarded as a sale, but a token value has to be involved. What do I need to do to sell my house for £1? A conveyancing solicitor will need to be instructed, in order to handle the transfer of the deeds from you to your son or daughter, or other family member. Contracts are still exchanged and completion dates confirmed. So there will still be legal fees to pay. If you own the property with a mortgage, it might not be possible to sell for a purely nominal figure like £1. If there is an amount outstanding on your mortgage, this will need to be covered by the person you are gifting the property to. So it would make sense for this to be the price of the gift.   What are the other costs involved? Mortgage redemption costs for gifted property If you do still have a mortgage, are you in a discounted term? If so there will be a redemption figure to pay, along with any outstanding borrowing. Ask your solicitor to contact your mortgage provider for a mortgage redemption statement. Legal fees You will be charged legal fees by your solicitor, but as their workload is not as heavy as a conventional property sale it may be worth asking for a reduced fee. Capital Gains Tax (CGT) on gifted property You are not liable to pay capital gains tax on gifted properties if it has been your Principal Private Residence. There will be CGT to pay if it was used as a business premises or rented out. From any CGT bill you can deduct capital improvement costs, stamp duty, legal fees and estate agents’ fees. Stamp Duty Land Tax (SDLT) on gifted properties If there is no mortgage on the property, there will be no stamp duty incurred. Standard rates of stamp duty will apply if the mortgage exceeds the stamp duty threshold. Stamp duty is also paid if your child already owns another home and is either using the gifted property as a second home or renting it out. Inheritance Tax (IHT) on gifted properties This is one of the main reasons why people prefer to gift property, rather than leave it to children as part of their estate when they pass away. If you do not die within seven years of making the gift, there is no inheritance tax to pay. If parents die within three years, inheritance tax is charged at 40%. After this inheritance tax is charged at what is called ‘taper relief’, and only if the value of the gift exceeds the tax-free threshold. Income Tax on gifted properties There will only be income tax implications if your son or daughter chooses to rent out the property they are gifted, either to you or someone else. Capital gains tax will also need to be paid in this circumstances if the property is sold at a later date. Can I avoid care home fees by gifting my house? People may be tempted into thinking that gifting their property effectively ‘disposes’ of it, so it can’t be used to measure what you can afford should you have to go into a care home. However, this is seen as deliberate ‘deprivation of assets’, especially if the gift is made a short period of time before the care home fees are required to be paid. Local authorities will judge on what the intent was behind your decision to gift the property, and the value of the property will usually still be counted as part of your assets. Sign up today to be among the first to know about property for sale in your area. Can I give my child money to buy a house? Yes. If you want to help your son or daughter raise a deposit you can make a gift to them. All the beneficiary needs to do is provide written confirmation to their mortgage provider that it is a gift, so that it is clear it is not a loan that has to be repaid. Let us help value your property If you are thinking of gifting your house to your child, but are interested to know how much your property will be worth when it is transferred, please get in touch with us and we will provide a free property valuation for you.

A buyer wishing to make an offer needs to speak to the estate agent you have chosen to sell your property. They can do this verbally (over the phone or in person) or in writing (via post or email). However, this offer is not legally binding until exchange of contracts, therefore an offer subject to contract still allows for the price of the property to be negotiated. The estate agent must communicate all offers to the seller in writing even when the offer has been discussed verbally. Any conditions around this offer must also be included in writing. It is also the responsibility of the agent to ensure that the buyers are in the position they state and therefore able to deliver on the offer they have put forward. Sign up today to be among the first to know about property for sale in your area. Declining and accepting offers Declining an offer: One of the most common reasons for declining an offer is that the potential buyers have offered an amount lower than you are willing to accept. Other reasons might include the position of the buyers not being favourable to your requirements e.g. they have yet to have an offer on their own property for sale. You do not need to make a decision right away. Think carefully about the offer being presented to you and inform your estate agent if you wish to decline. Accepting an offer: Once you have received an offer you are happy with, inform your estate agent. Make sure you discuss all the details and agree estimated dates for exchange and completion. It can be useful to put this in writing for the estate agent and the buyer – it will not be a legally binding contract, but helps to make sure everyone is in agreement. One element to confirm is whether the property will be taken off the market following the acceptance of the offer – some sellers prefer to keep the property on the market for a while. You are not obligated to accept an offer – you can choose which offer suits you best. This may depend on the chain with the potential buyers or the value of the offer. Discuss your options and any concerns with the estate agent. Offer agreed – what now? Brilliant, you are a big step closer to selling your property! Negotiating the sale through to completion takes time and skill. There are a few tasks your chosen estate agent is now responsible for, following your acceptance of an offer: Written communication to all parties to confirm the agreed price and any conditions of the sale. Preparing a memorandum of sale. Ask the sellers and buyers for confirmation of their solicitor’s details. Take the property off the market if this has been agreed to by the seller. It is now time to work with the estate agent to: Agree a date for a survey of your property. Agree a date for the exchange contract – also known as Exchange Date. Agree a proposed date for completing on the property sale – also known as Completion Date. Not sure on some of the terms around buying and selling property? Try Howards jargon buster. During this time, your solicitors will be responsible for sending out a draft contract to the buyer’s solicitors. The buyer’s solicitors will be responsible for carrying out the preliminary enquiries. Both the estate agents and your solicitor should provide you with regular updates so that you are kept informed of the progress. Next is the final step: Exchanging contracts and completion.