{"id":692,"date":"2022-07-29T12:54:44","date_gmt":"2022-07-29T12:54:44","guid":{"rendered":"https:\/\/springbokproperties.co.uk\/blog\/?p=692"},"modified":"2022-07-29T12:54:44","modified_gmt":"2022-07-29T12:54:44","slug":"selling-property-to-family-below-market-value","status":"publish","type":"post","link":"https:\/\/www.springbokproperties.co.uk\/blog\/selling-property-to-family-below-market-value","title":{"rendered":"Selling Property to Family Below Market Value"},"content":{"rendered":"

If you are planning to move out of your current property, you might wonder whether you could sell that house to a family member. But does UK legislation allow you to part with property for below fair market value in order to help out a child, grandchild, parent or sibling?<\/span>\u00a0<\/span><\/p>\n

Below, we\u2019ll discuss selling property below market value to a friend, family member or loved one.\u00a0<\/span>\u00a0<\/span><\/p>\n

We\u2019ll answer a range of questions, including \u201ccan I sell my house below market value to my son?\u201d, \u201cwhat are the tax implications if I sell my house to a family member for \u00a31?\u201d and even \u201ccan an executor sell property below market value?\u201d.<\/span>\u00a0<\/span><\/p>\n

Can I Sell My House Below Market Value to My Son?<\/span>\u00a0<\/span><\/h2>\n

Absolutely. As your home is your property in every sense of the word, you can sell it to whomever you choose, for any chosen amount.<\/span>\u00a0<\/span><\/p>\n

You can sell it for just \u00a31 – or even less – as is outlined in this <\/span>helpful guide<\/span><\/a>.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

However, it is important to ensure that money changes hands. This is the only way in which a contract of sale may be created. If there is no contract, the sale is not legally binding.<\/span>\u00a0<\/span><\/p>\n

If you do decide to sell property below market value, the \u201cdiscount\u201d you offer will almost certainly be subject to taxation. This is because, in the eyes of the law and of HMRC, the difference between the house\u2019s fair market value and the amount for which you sell it is considered a \u201cgift\u201d.<\/span>\u00a0<\/span><\/p>\n

What are the Tax Implications if I Sell My House to a Family Member for \u00a31?<\/span>\u00a0<\/span><\/h2>\n

When you hand over an asset of value to another individual without any request for remuneration (i.e., if the value of the asset is not to be considered a loan), it constitutes a \u201cgift\u201d and is therefore taxable.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

Specifically, HMRC requires that <\/span>Inheritance Tax<\/span><\/a> is paid on gifts worth over \u00a33000. This amount \u201cresets\u201d annually, which means that you can give gifts valued up to \u00a33000 every tax year.<\/span>\u00a0<\/span><\/p>\n

If you do not use the entire allowance, you may carry the remainder over into the next tax year. However, this can only be done once!<\/span>\u00a0<\/span><\/p>\n

There is no Inheritance Tax payable on gifts of any size between legally married couples or civil partners, as long as both parties live in the UK.<\/span>\u00a0<\/span><\/p>\n

How Does Inheritance Tax Work?<\/span>\u00a0<\/span><\/h2>\n

Inheritance Tax is a levy on the estates of deceased individuals.<\/span>\u00a0<\/span><\/p>\n

Along with the aforementioned \u00a33000 annual threshold (or \u201callowance\u201d), Inheritance Tax – or IHT – works according to very specific conditions. These are as follows:<\/span>\u00a0<\/span><\/p>\n