This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Right to buy

nathan1
Posts: 5
Joined: Wed Mar 18, 2009 6:50 pm

Right to buy

Postby nathan1 » Sat Mar 09, 2019 6:46 pm

With some redundancy money and savings I have a lump sum to invest, my mother under the Right to buy scheme can purchase her council property for £89k vs a valuation of £170k. I can not purchase it with her as I have already brought my own property under the right to buy scheme so I would like to purchase her property and have it in her name solely until she passes away leaving the property to me. Am I able to to this without paying Tax or does this come under "gift" taxation, also would there be an inheritance taxation when she eventually passes away leaving the property to me?

AGoodman
Posts: 887
Joined: Fri May 16, 2014 3:47 pm

Re: Right to buy

Postby AGoodman » Tue Mar 12, 2019 1:46 pm

You need to be clear about what your mother can/can't do.

You can lend her the money to buy it but the question is whether she can buy/own it as a nominee for you. I suspect probably not but have never had to look at the terms. If she bought it with a loan from you and then gave it to you beneficially (this is probably a sale to you as it would also repay the loan), that might also trigger the disposal regime (offers back to the LA / repayment of discount) as well as stamp duty land tax.

If she can buy as your nominee, then the property would be yours for tax purposes so no IHT or other taxes on her death but you would pay CGT when you came to sell it.

AGoodman
Posts: 887
Joined: Fri May 16, 2014 3:47 pm

Re: Right to buy

Postby AGoodman » Tue Mar 12, 2019 1:53 pm

Actually, even in the nominee arrangement, there would likely be an IHT issue.

As you are not paying full price, the discount your mother has accrued is considered (by HMRC) to be a gift to you and your mother retains a "reservation of benefit" in the property by living there. That means that the gift remains in her estate and is subject to IHT. The value brought into charge on death could be either the proportional part of the property (discount/MV at purchase) or the whole of the property if HMRC were feeling aggressive that day but more likely the former.

nathan1
Posts: 5
Joined: Wed Mar 18, 2009 6:50 pm

Re: Right to buy

Postby nathan1 » Tue Mar 12, 2019 7:49 pm

Thanks for the replies, the property would be in my mother's name only with the money gifted or "loaned" to her. In the event of her death she will leave the property to me in her will, at the values mentioned, surely IHT would not be liable?

AGoodman
Posts: 887
Joined: Fri May 16, 2014 3:47 pm

Re: Right to buy

Postby AGoodman » Wed Mar 13, 2019 11:29 am

Not if they are her only assets of value, no.


Return to “Property Taxation”