If we are to buy a house from a close friend for a price agreed between the two of us, but revenue decide the house is worth more, are the seller and the buyer of the house liable for Capital Acq Tax and Cap Gains Tax on the difference.
I have been living in/renting a close friends house for 4 years, and he is happy to sell it to me for about 75,000 less than it is worth (cash figure of 225k against recent valuation of 300k)
he does not think it is worth 300k, i dont think it was worth 300k
By selling it for 225, he is going to make over 100k profit (bought during early 90’s)
I cannot raise more than 225 in a mortgage, and he doesnt want to kick me out of the house, but wants to sell.
Will revenue actually charge him the CGT between his purchase price and the valuation rather than the selling price?
We revenue see him as giving me a gift of the difference between their valuation and the sale price
Help needed, as i thought we were days away from settlement
My understanding is that the seller can sell a house for whatever he wants - a relative of mine once bought a house off a relative of his for 5k when it was worth >200k. He was due to inherit it but both parties wanted to avoid anyone contesting the will.
In this market who is to say what the house is really worth so you should have no problems with your 225k purchase.
Buyers of home are only liable for Capital Gains Tax if they have never lived in the house after purchase - doesn’t sound like it will affect you.
The seller will pay tax on the difference between his purchase price and the sale price for the % of time he rented it and less some inflation allowances (see below). He may have less tax to pay than he thinks.