Is stamp duty payable if you gift a property to a family member?

[DoggusSausageous]

If I can make it work with my pension, I am thinking of buying a flat where my DC1 will go to Uni, and then later give it to him (if I can afford it).

Or, if an inheritance comes my way would it be better to buy straight away in my DC's name? Because stamp duty would be higher on any second property I bought?

Just musing to myself really - and I suppose the property is likely to be below Stamp Duty level (what is it these days?).

Pensions can not own residential property only commercial property.

How do you mean, Lonecat?

Can I not draw down my pension once I am 55 (I am!) and buy a property with the money?

I don't quite understand, do you:

A. Want to buy the property in your name and then later gift it to your son? Or;
B. Buy the property in your son's name?

If A you will pay the SDLT on the purchase (and the additional rate if a second property) but not on a subsequent gift (as long as no "value" were paid by your son).

If B, technically if the purchase money is provided by you for your son to buy the property and you already own a property then yes the additional SDLT is payable.

As always bear in mind the inheritance tax position for large lifetime gifts.

You would probably be best seeking some specific legal advice at the time.

Sorry I thought you were proposing that a SIPP pension purchased a residential property.
I, however would be cautious about drawing down pension and make sure you have had an IFA look at the figures and ensure you will have adequate income in retirement.

My Dad sold me a house worth £450k for £330k. We only paid stamp duty on the £330k. I had to call up HMRC (or whoever deals with it) and they confirmed- stamp duty is only payable on money that changes hands.

This was July 2016.

Daisy, thank you, that's really helpful - yes, I am trying to decide between A and B.

I am not actually in a position to do any such thing at the moment.

In a couple of years just as Dc goes to Uni I might be in a position to re-locate and downsize from my current house. I will also be close to retirement age then, and wondering whether drawing down the capital and buying a flat to have the rental income rather that an annuity...

So:
Help my son through Uni with a student flat bought with downsize money, and I manage on state pension plus what I could get from a rental flat bought with my pension money.

You are quite right, I need to consider many angles and especially seek financial advice!

Thanks Lonecat and Medusa - interesting about SDLT only payable where money changes hands.

It also depends, I suppose, on which uni he goes to doesn't it? And how will you be able to buy one in the right place before he has his A level results? Encourage a gap year? A London Uni would make for an expensive flat.

If your DC owns the flat and rents a room out to others he can make of the rent-a - room tax relief a generous scheme from our Government. If you own it he can't use it as you won't be living there.

Fabulous, thank you, another good point.

There will be a gap year, with UCAS application made after A level resultscare known so it should be easy to establish very early where he will go. The current top choices are a city with expensive property prices and one with low! He could still be in Hall the first year and just rent it out.

There is a lot of juggling needed to make any of this happen though.

i have helped the older children with property but I don't think i would do it linked to university as they are quite young then and don't quite know what they will do, might drop out and tend just to be in that town for a short period and a property might tie them there. It might be better for you to wait until they are a bit older. (I did draw pensions at 55 for children's housing but that was for a lot of different reasons including that I will work until I die paying higher rate tax and I wanted them to have the money now and it did mean that HMRC got 45% of 75% of the pension fund which is very lucky for the state and the many calls on its coffers but obviously not that great from my personal tax point of view).

You will need a rental income, though, won't you?

Xenia - ouch at your tax hit!

I know. I will be doing my next tax return recently and HMRC probably think I have a very very high paid job as they thought the penson pay out last year was PAYE earnings. I had better start the tax return soon as I bet it does not go smoothly this year.