I currently own Property A (my main place of residence) with a 60% mortgage. Property A is valued at £150k, therefore the outstanding mortgage is £90k.
My parents are mortgage free, and still working.
Can I give my parents my property + mortgage, then purchase a new home (Property B) to avoid SDLT?
I would then like my parents to gift me back Property A. I am trying to interpret UK tax guidance on gifts of property to determine if this is allowable.
Given that your primary residence has a mortgage, you won't just be able to transfer it to your parents - the mortgage company would normally first want the mortgage to be repaid. Even if they allowed it to be transferred, this would be likely to involve fees, including verifying that your parents and then you were eligible for the mortgage.
Even if your property were mortgage free, you would risk having the transactions be treated as an artificial way to avoid tax, and ignored. In the worst case you could be prosecuted for fraud or tax evasion.
If your scheme did work and your parents died within 7 years, you might find yourself liable to inheritance tax on the "gift" returning your property.
SDLT is payable only when you acquire a freehold property.
I don't understand your reasons for transferring the property and then reaquiring it as this will have no affect on your SDLT payable.
I believe if your parents take over your mortgage as the remaining amount is below the £125k threshold then no SDLT will be owed by your parents.
SDLT will however be payable upon purchase of a new property. Therefore no matter what you intend to do with your current property a charge will still arise on the new acquisition.
An important consideration however is if the worst was to happen and your parents where to die within 7 years of giving you the asset back then an inheritance tax charge may arise depending on the value of there death estate.
Hope this helps :)
