Tax Implications of swapping houses with son

Serengeti

Hi, My son has a house which is too small for him and his wife and three children.
My wife and I live on our own in a four bedroom house quite close to him. This house is really too big for us and we were thinking a straight swap might be feasible, but I also think this could be a taxation minefield. Our house would be a good deal more valuable than my son's, with his requiring money to be spent on renovation.
Not looking for detailed advice, but any information or views on possible tax implications for us and our son would be greatly appreciated.
Thanks in advance.

barneystinson

Well the possible taxes involved are:

Stamp duty - that applies on the market value of each property.

Capital gains tax - separately to each party on their disposal of property. Again applies based on the market value of the property. If both properties have been the sole or main residence of its owners throughout the period of ownership then there'll be a full exemption.

Capital acquisitions / gift tax - if property transfers and the consideration received (in this case a house) is of lesser value than the property transferred, the difference will constitute a gift within the scope of CAT. There's annual exemptions and then lifetime thresholds, which will limit or mitigate this exposure. Any liability would arise to the recipient of the gift.

You need professional advice.

Serengeti

Thanks for reply Barneystinson. Presumably if my son paid us the monetary difference in value of the two houses, the question of gift tax would not arise.

scheister

Serengeti wrote: »

Thanks for reply Barneystinson. Presumably if my son paid us the monetary difference in value of the two houses, the question of gift tax would not arise.

yea you are correct.

For example your house if worth 500k your sons house is 300k.

If he gave you 200k cash plus his house no gift tax would arise. Otherwise a 200k gift would arise.

Also the gift would be split between your son and wife i assume