Selling a house for lower than market value

[Gilles27]

Hi,

I own a house with my spouse and another that is a rental property. A couple of years ago my son moved into the rental property and pays just enough rent to cover the Buy-To-Let mortgage I have on the place. Hw would like to move and I would like to get rid of the house. I had it valued and the agent advised that I would have to pay Capital Gains Tax as the house is worth approx £85K more than I paid for it 15 years ago. For arguments sake, let's say I paid £100K and it is now worth £185K I had an idea.
What if I sold the house to my son for £100K? He could afford to pay a £100K mortgage. I could use that money to pay of my mortgage on my home and the house he's living in. Then, in 12 months say. my son would then put the house on the market. Whatever he sold it for he would keep, less £85K to be passed to me. He could then buy his own place and could prove to the bank that he'd been a good payer for 12 months.
It sounds like a good plan to me, but is there anything illegal about it? Is it tax evasion?

[PallasAthena]

This gov.uk page suggests your plan will not work because if you sell the house to your son at less than market value CGT will be based on market value at date of sale not on the (lower) sale price.

Capital Gains Tax: what you pay it on, rates and allowances: Market value - GOV.UK (www.gov.uk)

[atticus]

On your description, the sale price to your son would be £185,000 - £100,000 now and a further £85,000to be paid when he sells in a year or so.

It is not easy to get round paying tax, and HMRC may well look into a transaction to a close associate (your son) for an unrealistically low price.

Some cunning plans really are not that clever.

[Gilles27]

Thanks so much for the replies. I now have to let my wife know that she was right (again!).

[atticus]

These things happen!

[RageSloth]

This gov.uk page suggests your plan will not work because if you sell the house to your son at less than market value CGT will be based on market value at date of sale not on the (lower) sale price.

Capital Gains Tax: what you pay it on, rates and allowances: Market value - GOV.UK (www.gov.uk)

Atticus, give them a break, I'm sure they are new and can learn to become much sneakier.

[RageSloth]

This gov.uk page suggests your plan will not work because if you sell the house to your son at less than market value CGT will be based on market value at date of sale not on the (lower) sale price.

Capital Gains Tax: what you pay it on, rates and allowances: Market value - GOV.UK (www.gov.uk)

How accurate would their valuation be, how biased in their favour haha?

[PallasAthena]

HMRC check what you say is the market value against independent sources (that's what they say on their website - don't ask me how). They don't just take your word for it.

IIRC they can ask you to send them three independent valuations and they expect you to take the average price.