Legal implications of trying to dodge stamp duty?

[Namenotfound]

Name changed as I appreciate this is morally dodgy. I’m interested in the legal position.

I am looking to upsize at the same time as my mum is looking to downsize to a flat; she has very generously offered to sell me her house (worth probably £850k) for whatever I can sell mine for (probably around £650k), on the proviso that she wouldn’t be expected to get the house ready for sale, could leave furniture behind and that sort of thing.

As far as I can tell, it is perfectly legal for her to gift me the house and have the deeds signed over to me. Equally, as far as I can tell, I am legally able to gift as much money as I want to a family member.

Is there any reason she couldn’t just gift me the house, and I couldn’t just gift her £650k once the sale of my house had been completed, saving ~£20k of stamp duty?

I know if either of us died within the next 7 years the gifts would form part of our estates for IHT purposes, which is fair enough but on balance seems unlikely. We are both in good health and most of the women in our family have lived well into their 90s.

Equally, I know this may be considered deprivation of assets if she needed care later, but I don’t think we would be relying on local authority funding for care anyway. My mum has an excellent DB pension, lots of savings, and I would be able to top up any difference.

I know to some considering this will be morally reprehensible which is fair enough really, still would be grateful for any advice.

Are you sure you can gift £650k to your DM with no tax liabilities?

You would have to satisfy HMRC that your DM will not do anything in return that provides a material benefit to you as the giver.

No worries. :) It was an interesting thought that only really fell down when considering the risk of you unexpectedly passing away.

When it comes to tax, even though two parties may be very close and agree on everything, you always have to think about the impact of an unexpected death on all the planning. It would be hard enough for any parent to outlive their child, but when you factor in all the hassle and the financial hardship it would cause to your mum on top of grieving, as you say, it becomes a non-starter.

But it certainly wasn't the attempt to commit fraud that other posters suggested... Unlike some of them, I am passing no judgements on your moral character. You've asked, it's been answered, you've moved on!

I hope the respective house moves go well, and I wish far more than just seven years of good health to both you and your mother. :)

I’d love to know how you vote OP

One other risk stands out to me - divorce risk. Ie - if you and your dh split up in the time between your mum transferring her property to you and you paying the money to her. (If you are married.)

Unlikely but not impossible. I read a lot of thrillers and if you were a main character in a thriller the chance of you discovering that your husband is either cheating on you or a serial killer during the time is roughly 1 in 3 I would say. You would then have to do some kind of plucky, slightly illegal move (probably with the assistance of a rather dashing chap who has just appeared for no apparent reason) to protect the money.

I know someone who bought their parents house but they still had to pay stamp duty

Friends parents didn't have a mortgage on the property

I think they did it that way because it was less complicated

If what is really happening is that you are giving her 650k in exchange for the house, saying that it’s a gift for no consideration is tax evasion and fraud.