Sale of main residence to children

[Yiannis17]

Morning

I have a client who wants to sell his main residence to his children at a price way below the market value. The price is somewhat 50% less. The children intend to get a mortgage on this and pay the stamp duty.

I have actually seen this happen once before. What would be the consequences of this?

Thank you

[AGoodman]

No CGT as PPR

A PET of the balance unless he is staying in residence in which case it will be a GROB of the balance.

If he is going to remain in the house (and not pay rent) then it is a bad idea for tax purposes - the balance will remain a GROB until 7 years after he has left the house so no use for IHT, there is the SDLT and the children will have to pay CGT on an eventual sale.

[Jonathan Terry]

What if the parents retained ownership of say 25% of the property and lived there.

Would it still be GROB?

thanks

[maths]

If parents keep 25% and gift 75% and children and parents live there a reservation of benefit will not arise assuming parents do not receive any benefit connected with gift e.g. parents must pay at least 50% of expenses of property.

It is understood HMRC believe that no more than 50% may be gifted although this is only their view.