Hi everyone,
My parents have now reached the point that they are selling their Buy to let properties, the first of which they have offered me.
They wish to sell it to me with the current tenant who is a problem tenant
(so I would have to go through the legal hassles, unpaid rent, damaged property rather than them (in their late 70's).
So, the property is probably worth £200,000 in good condition and untenanted, and they are thinking that they would be happy to sell it for £150,000 (we would get valualtions from local estate agents for the value with and without the tenant. They purchased it many years ago for about £40,000.
I assume that they would be liable for CGT on the uplift of value from £40,000 to £150,000 (if agent confirms this tenanted valuation).
I also assume that HMRC would take the £150,000 as the purchase price for my tax affairs.
Please confirm.
I also assume that costs incurred in legal expenses and subsequent repairs would be tax deductable from the annual property incomes, rather than on the sale of the property in xyz years time.
My parents are also considering then putting the £150,000 (less CGT) into a tax friendly child account for education of my children - so I assume that would have an implication of gifting and the subsequent 7 year rule.
There is a second option too that my parents are considering - to gift the house to me direct to fund my children's education .
I assume my parents CGT tax liability would be exactly the same - CGT in the uplift in value (tenanted value).
I also assume that HMRC would take the value on the transfer date for calculating my tax liabilities, and then the 7 year gifting rule also applies.
Is my thinking right?
Are there any other options that we could consider?
Many thanks for any advice.
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