Selling a gifted property

[Louise0701]

Does anyone know if you have to own a gifted property for a certain period of time before you can sell it?
Will potential buyers be able to get a mortgage for it straight away or will it have to be in the names of the gift recipient for a certain period of time first?

Who has gifted it to you? Is it part of a will? Or have you been given it by a partner/family member? Why do you need to sell it? Have you paid the appropriate taxes on the property?

I donlt think you have to own a gifted property for any length of time before selling but you may have CGT to pay if you already own a home.

More information is needed. I would speak to the solicitor who is handling the sale for you

DH’s parents; his parents bought 3 houses about 10 years ago. They lived in one for 4 years, then moved abroad and DH and I moved in. The intention was always to have the 3 houses put into their 3 sons names. They’re now back in the UK and are getting round to this.
We want to move as we’re not in catchment for the high school we eventually want for DC and have outgrown this house after having DC3 in the summer. Just wondering if it has to be in DH name for a certain period before we can sell?
Have had a look at CGT but not sure what would be owed as the value at the time of transfer compared to the value at the time of selling would be the same id of thought?
DHs parents are both in their late 50s so hopefully won’t be going anywhere in the next 7 years but understand IHT will need to be paid in that event.

It sounds like your in-laws still own the house, but I might have misunderstood that.
Whose name is on the deeds?

@campion yes they own it still. They have an appointment next week to start the process of transferring it into DH name.
I didn’t know whether we could realistically look at moving this year or next. Just trying to get an idea of timescales

Would they not be better selling the house and gifting you money from the profits?

Capital gains tax will be payable by his parents, and it will be based in the increase in value between what they bought it for ten years ago and it’s current market value. As an example, if they bought the property for £100K and it’s now worth £250K, they’d need to pay upwards of £30,000 depending on whether they’re basic or higher rate taxpayers.

If the property is put into your and your DH’s names, you’ll then need to pay stamp duty on your new purchase because you won’t be first time buyers: this could cost you thousands of pounds. Is there any reason why his parents are putting the property into his name first rather than just selling and gifting you some of the money?

It doesn’t need to be in DH’s name for any particular period of time before you sell, though solicitors would likely want to carry out additional money laundering checks because of it being an unusual series of transactions. But between the taxes and legal fees payable, the whole scenario makes zero financial sense.

He doesn’t need to own it for any period before he can sell it.

@ComtesseDeSpair

You realise a gift (even a lifetime gift) will give rise to IHT?

@TriangleBingoBongo I’m not sure it’s for me to realise, it isn’t my property. I’m sure if the OP’s in-laws are beginning the transfer process they’ll be informed about IHT implications.

Thanks @TriangleBingoBongo

No idea why they want to do it this way round but they do and it’s not really up for discussion.

As in, not up for discussion with them. They haven’t given options, just said this is what’s happening.

@Louise0701

I would actively discourage them purely on the basis that they’ll be removing your first time buyer status and when you move you’ll be required to pay stamp duty on your new purchase. Depending on the price of our new purchase, this could be thousands of pounds. That’s not really something that can’t be up for discussion.

The houses were looking at are between 300-325. The house we currently live in is valued at 160.
So the 160 minus stamp duty & all other costs would be used as a deposit on the new property. That’s where we see the benefit.
In terms of their thinking; I think they assumed we would always live here like DH’s brothers will do in the houses they’ve been given but it’s not in an area we would’ve chosen ourselves and as I said; not big enough now or in catchment for the school we want. So I think to them it was a very generous gift.

It is indeed a very generous gift, and I suppose you should all be commended for wanting to pay tax you could avoid!

Unconnected but for sake of family relations, are your DH’s parents aware you’ll be looking to sell immediately? If as you say they’re assuming you’ll always live there, you don’t want them viewing your decision to sell their gift as throwing it in their faces and causing financial fallout.

Yes we’ve told them we want to move. No issues there and they completely understand our reasons and are happy for us to sell.
I just meant at the time they bought it I believe the assumption was that we would stay.
It is very generous and we’re very grateful.
I can’t see another way round it really. We could extend but then we’re still out of catchment and that’s a biggie as the catchment school is really horrific. This was a fantastic start for us though.

@ComtesseDeSpair

I was just adding in another tax you hadn’t commented on given you seemed to be advising on tax implications.

You will pay IHT if they die within 7 years and the could be liable for CGT.

So you already own a house? The first time buyer/SDLT thing won't be an issue then.

Most lenders will not lend on a property until the seller has owned it for 6 months. Even then, be prepared to answer why you're selling so quickly.