Q My sister, who lives abroad, bought a UK property in 2004 which has since been let out, and I have been the letting agent. The average annual rent she has been getting is about £6,000-£7,000. This is her only UK property and she paid £47,000 for it – it is now valued at about £85,000. She is now thinking about giving it to me as a gift.
I already own one house with no mortgage. What are the tax positions if she transfers it to me, or if she sells it to me at a reduced price (eg £20,000)? If she were to sell the house and give me all the money, how much capital gains tax must she pay, and how much tax must I pay on this lump sum gift? PB
Q About 22 years ago, like many people, we were persuaded to take out an endowment mortgage. It was to cover a loan of £60,000, but of course like many of these products it is very unlikely to yield that sum when it matures. When we moved we kept the endowment, but split our mortgage so the amount covered by the endowment was reduced to £40,000 and we borrowed the rest on a repayment basis.
We are now in a position where the amount outstanding on the mortgage is about £38,000 and the endowment is currently worth about £43,000. We are on a base rate mortgage with no early redemption penalties so could surrender the endowment and pay off the mortgage. Our question is, would that be a good idea, or should we stick with the endowment until it matures in March 2013?
The endowment and mortgage payments come to about £450 a month, and with two children at university would be handy. We understand there is also a market for trading endowments – would we be likely to get a better deal if we pursued this option? We realise we would be giving up the life insurance provided by the endowment if we surrender or trade the policy. CL
either a transfer or at a reduced price – attract tax?
