Swapping house with a family member

[clio007]

I am hoping to get some advice on a property swap with my mother and sister are proposing

My mother owns her property outright which is worth circa 400k. My sister also owns a property worth circa 290k with a 120k mortgage.

My mother is planning on swapping her house with my sisters with my sister transferring her mortgage onto my mums property.

The end result we would like is my mum owning my sisters home outright and my sister owning my mums home with a 120k mortgage on it. Can anybody provide guidance on how we would actually do this? Would their be tax implications?

[craigjm]

Transfer deed with a solicitor
Transfer mortgage as you would any other sale
Pay SDLT same as you would with a sale
PET comes in to play if they survive for at least 7 years
Hope they don't have to go into a nursing home or LA could see it as an unfair transfer

[Sarnie]

clio007 said:

I am hoping to get some advice on a property swap with my mother and sister are proposing

My mother owns her property outright which is worth circa 400k. My sister also owns a property worth circa 290k with a 120k mortgage.

My mother is planning on swapping her house with my sisters with my sister transferring her mortgage onto my mums property.

The end result we would like is my mum owning my sisters home outright and my sister owning my mums home with a 120k mortgage on it. Can anybody provide guidance on how we would actually do this? Would their be tax implications?

It's not simply a "swap".

Your Mother is selling her property (to your sister) and your Sister is selling her property (to your mother).

There would need to be a Gifted Equity deposit from your Mother to your Sister to the difference between the £290k her property is worth and the £400k your Mothers property is worth.

You need Professional help with this, in my opinion.

[clio007]

Thanks for your help both.

Who would I go about speaking to about this? Some sort of residential solicitor? Is there anyway to avoid paying stamp duty? Or will we have to pay it on both properties

[Sarnie]

clio007 said:

Thanks for your help both.

Who would I go about speaking to about this? Some sort of residential solicitor? Is there anyway to avoid paying stamp duty? Or will we have to pay it on both properties

You will have to both pay stamp duty..................what people in these situations get confused about is the added complexity of the buyers and sellers knowing/being related to each other.

Remove that relationship and what you are left with is one person buying a property from a person who in turn is buying theirs from them.....

[craigjm]

Like Sarnie said, in law there is no real difference between a "swap" between two people who know each other and a sale between two people that dont. The mortgage provider will still insist on all of the outcomes of conveyancing etc as they are moving their risk. You may be able to save some money but certainly not stamp duty or anything significant. You need to speak to a property solicitor.

If the swap is being done to avoid SDLT and potential inheritance tax etc then it may not save you what you expect.

[clio007]

No its not do with avoiding inheritance tax. Its just up sizing for my sister.

I guess it would be different from a stamp duty point of view if my sister was mortgage free right? Perhaps we could pay off her mortgage and then she can re-mortgage once we have swapped over.

We are just looking at the most cost effective way of doing it.

[craigjm]

clio007 said:

I guess it would be different from a stamp duty point of view if my sister was mortgage free right? Perhaps we could pay off her mortgage and then she can re-mortgage once we have swapped over.

There would still be stamp duty due, you cannot avoid it. Valuations etc will still be required.

Good discussion on it here -

http://www.moneywise.co.uk/home-mortgage/buying/ea...