The term "value".... tax related
Discussion
The question I have is at what threshold does an asset have a value determined by a court/authorities and not by the individual selling or buying?
Example : If I had a car I bought for £10,000 and sold it to a family member for £500 then the value of the car is agreed between the two individuals.
But if I had a house I bought for £450,000 and wished to sell it to a family member for £10,000 then the government would step in and say "no no no".
Example : If I had a car I bought for £10,000 and sold it to a family member for £500 then the value of the car is agreed between the two individuals.
But if I had a house I bought for £450,000 and wished to sell it to a family member for £10,000 then the government would step in and say "no no no".
GT03ROB said:
In the context of your question the answer is where there is a tax liability associated with he transaction. For a car there is no tax liability for the property there is.
Yep - for the house, SDLT is the issue. For a car there might still be a tax issue - CGT or IHT. If the car's being transferred from an older person, deprivation of assets might become an issue if they need residential care and run out of money.I thought that I had read somewhere on here in the dim and distant past that you could sell it to them at what ever value you wanted, as long as tax was paid on the perceived true market value.
As long as HMRC get the share they deem to be theirs, you can sell for what ever amount you want.
(Caveat: I could be and most probably are talking manure).
As long as HMRC get the share they deem to be theirs, you can sell for what ever amount you want.
(Caveat: I could be and most probably are talking manure).
TooMany2cvs said:
GT03ROB said:
In the context of your question the answer is where there is a tax liability associated with he transaction. For a car there is no tax liability for the property there is.
Yep - for the house, SDLT is the issue. For a car there might still be a tax issue - CGT or IHT. If the car's being transferred from an older person, deprivation of assets might become an issue if they need residential care and run out of money.PH5121 said:
I thought that I had read somewhere on here in the dim and distant past that you could sell it to them at what ever value you wanted, as long as tax was paid on the perceived true market value.
As long as HMRC get the share they deem to be theirs, you can sell for what ever amount you want.
(Caveat: I could be and most probably are talking manure).
You are correct.As long as HMRC get the share they deem to be theirs, you can sell for what ever amount you want.
(Caveat: I could be and most probably are talking manure).
So it is the asset type that has a condition on it that has to conform to a 'market' value?
In the case of the car, if I were to say that I bought a car for £300,000 and wished to sell it to a family member for £10,000, then the tax man would not step in to say he thinks the value of the car should be higher?
In the case of the car, if I were to say that I bought a car for £300,000 and wished to sell it to a family member for £10,000, then the tax man would not step in to say he thinks the value of the car should be higher?
AA999 said:
So it is the asset type that has a condition on it that has to conform to a 'market' value?
In the case of the car, if I were to say that I bought a car for £300,000 and wished to sell it to a family member for £10,000, then the tax man would not step in to say he thinks the value of the car should be higher?
He won't intervene as there is no tax at all involved in the sale or transfer of a car between private individuals.In the case of the car, if I were to say that I bought a car for £300,000 and wished to sell it to a family member for £10,000, then the tax man would not step in to say he thinks the value of the car should be higher?
In a property transaction there is (potentially) Stamp duty and CGT.
AIUI stamp duty is paid on the actual selling price, not the market value. You can quite legally give your house away, or sell it for a fiver, and the buyer will pay no stamp duty. What you can't do is sell other stuff at the same time for above its market value in order to disguise the actual price the house is selling for - HMRC are wise to tricks likeb "you can buy my house for a fiver so long as you also buy the carpets and curtains for half a million quid". Similarly if you still have a mortgage and you give the house to a relative who takes over paying the mortgage, the mortgage would be counted as part of the selling price. But a genuine, no strings attached, sale for a knockdown price would mean that stamp duty is only payable on the actual selling price.
You may have a problem if at some time in the future there is a need for carehome or similar, I am fairly sure they take a dim view on disposing of a sizeable asset and then expecting the state to pay for extended care. Not sure how the state come after you or if there is a 7 year limit.
Pay properly for some advice from a lawyer who deals in wills and trusts
Pay properly for some advice from a lawyer who deals in wills and trusts
AA999 said:
Aretnap said:
AIUI stamp duty is paid on the actual selling price, not the market value. You can quite legally give your house away, or sell it for a fiver,...
Are you sure?Or do you mean am I sure that stamp duty is only payable on the actual sale price? If so, reasonably, eg the government website only talks about the chargeable consideration for the sale and makes no mention of the market value of the property.
https://www.gov.uk/stamp-duty-land-tax-the-amount-...
It also notes that a gift attracts no stamp duty. it would be a little silly if gifting your house attracted no stamp duty, but selling it for a fiver meant that thousands of pounds were payable.
There may still be capital gains tax implications if it's not your primary residence (CGT is assessed in terms of the market value of the asset at the time of disposal, not necessrrily the actual selling price) or inheritance tax implications were you to die within 7 years (in which case the difference between market value and sale price could be classed as a gift).
Selling a house is a big deal though so if you're thinking of doing this get proper legal advice - don't rely on the word of a bloke on the Internet.
Aretnap said:
Or do you mean am I sure that stamp duty is only payable on the actual sale price? If so, reasonably, eg the government website only talks about the chargeable consideration for the sale and makes no mention of the market value of the property.
https://www.gov.uk/stamp-duty-land-tax-the-amount-...
It also notes that a gift attracts no stamp duty. it would be a little silly if gifting your house attracted no stamp duty, but selling it for a fiver meant that thousands of pounds were payable.
AIUI, the key is linked considerations. So there's no SDLT due on fixtures and fittings, but selling your house for £10 plus £200k for the second-hand sofa would count as £210k for SDLT.https://www.gov.uk/stamp-duty-land-tax-the-amount-...
It also notes that a gift attracts no stamp duty. it would be a little silly if gifting your house attracted no stamp duty, but selling it for a fiver meant that thousands of pounds were payable.
Aretnap said:
What do you mean? Am I sure that you can sell your house for less than its market value? If so yes - .....
So for example I could sell a £550,000 house for £1 and HMRC would not take any interest?(I'm not trying to sound like I know and not attempting to belittle your replies, hence the reason I created this thread).
But I thought it would be the case that one could not transfer wealth in such a manner?
And interested if the law deems other items to have a value regardless of what value is attached/agreed by individuals?
OP, I think if you want any kind of useful response you are going to have to say what it is you (or your friend or whoever) wants to do and for what purpose. There are too many variables otherwise.
If you want to sell your £1m house to your son for a fiver because you think you're about to go bankrupt then no, that probably (definitely) isn't OK.
If you want to sell your £1m house to your son for £300,000 because you're a lovely bloke and you just want to do something nice for your son then that's probably OK provided you don't die within the next 7 years and subject to that house having been your primary residence for a certain period (I'm sure some tax bods would be able to clarify this exact point.
If you give some more details I'm sure somebody with experience in the relevant area will come along and offer you some helpful pointers.
As someone has already pointed out, generally property is the most valuable thing most people will ever own. As such its sensible to take proper paid for legal advice before carrying out any transactions.
HTH
If you want to sell your £1m house to your son for a fiver because you think you're about to go bankrupt then no, that probably (definitely) isn't OK.
If you want to sell your £1m house to your son for £300,000 because you're a lovely bloke and you just want to do something nice for your son then that's probably OK provided you don't die within the next 7 years and subject to that house having been your primary residence for a certain period (I'm sure some tax bods would be able to clarify this exact point.
If you give some more details I'm sure somebody with experience in the relevant area will come along and offer you some helpful pointers.
As someone has already pointed out, generally property is the most valuable thing most people will ever own. As such its sensible to take proper paid for legal advice before carrying out any transactions.
HTH
Edited by JimiGT on Friday 21st August 13:56
There is genuinely no motive behind my thread questions. It sparked an interest from a conversation I had with a bloke at work.
Basically he was on about receiving money from abroad (outside the EU), from his wife's parents. The sum they were receiving amounted to about £150,000 and was discussing tax issues and if there were any.
On checking the government website it makes mention that a person can receive up to £3000 annually as a cash gift before the tax man takes interest.
But then another number of forum posts on websites make mention that its only the Inheritance Tax threshold of around £350,000 that should be the only 'worry'. And that as long as he received less than this (over the course of his life?), then he'd be ok without being requested to pay any tax.
The conversation progressed to another stage and this is when 3rd party to the conversation stepped in and mentioned that he recently bought a property that had been repossessed and was owned by the bank. The property had been on the market for over a year and had received no offers on it. He made a low offer but the bank insisted that even if they wanted to they could not sell the house for less than the market value (with some tolerance factor in there). As if they did then the tax man would be on to them.
So it just got me thinking that if a house HAS to have a certain value on it regardless of the two parties agreeing their own value for purchase/sale, then does it apply to other items?
As I guess its all to do with the transfer of wealth and the government wanting to grab that wealth in any way they can.
Some cars for example cost as much as houses these days!
Paintings etc. etc.
Basically he was on about receiving money from abroad (outside the EU), from his wife's parents. The sum they were receiving amounted to about £150,000 and was discussing tax issues and if there were any.
On checking the government website it makes mention that a person can receive up to £3000 annually as a cash gift before the tax man takes interest.
But then another number of forum posts on websites make mention that its only the Inheritance Tax threshold of around £350,000 that should be the only 'worry'. And that as long as he received less than this (over the course of his life?), then he'd be ok without being requested to pay any tax.
The conversation progressed to another stage and this is when 3rd party to the conversation stepped in and mentioned that he recently bought a property that had been repossessed and was owned by the bank. The property had been on the market for over a year and had received no offers on it. He made a low offer but the bank insisted that even if they wanted to they could not sell the house for less than the market value (with some tolerance factor in there). As if they did then the tax man would be on to them.
So it just got me thinking that if a house HAS to have a certain value on it regardless of the two parties agreeing their own value for purchase/sale, then does it apply to other items?
As I guess its all to do with the transfer of wealth and the government wanting to grab that wealth in any way they can.
Some cars for example cost as much as houses these days!
Paintings etc. etc.
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