Selling to son

Thank you all for your help- there's much food for thought here. Eglantine21 you hit the nail on the head, that's exactly what we wanted to do Would the CGT be payable from the start of the loan or once once paid off do you know?
Thanks Cold, we have contacted several people to discuss this.

I think you need to get proper legal advice about this - there are many legal pitfalls for you
- I am not sure how you see ownership? Would your transfer the flat to him or would it be joint?
- are you planning to charge him the full market price? If not there may be problems with the local authority if you ever need care
- how is planning to pay for the flat? Is he getting a mortgage and buying you out? Or would you in effect be giving him the mortgage which he pays back with his monthly payments? What would happen if you needed your "pension" in the next 25-30 years or whatever it would take to pay your back?
- what happens if he loses his job? I think he would be ineligible for housing benefits in a property owned by family
- what happens if he wants to sell or needs to move for work?
- what happens if he gets married - the flat becomes marital property?

You needs to go through these questions with a property solicitor and if you choose to go ahead the lawyer can draw up a legally binding agreement

In effect you are loaning him the price of the house so that he can buy it by paying what is now rent but counting it as repayment on the loan in future.
Have I got this right?
The easiest option is to draw up a private loan agreement. This then gives you the right to reclaim the house to pay off the loan if he defaults for any reason or if he sells at a future date.
Of course no money actually changes hands except for the repayments on the loan. To which you can add interest or not.
Then the house sale proceeds as normal.
I afraid you will have to pay capital gains tax on the market value of the house at the time of sale regardless of what he pays for it.

mini I didn’t mean to imply you might want to dodge the tax man or do anything illegal.
But no one wants to pay any more tax than they have to.

MiniMama
I believe what you are talking about is called: a private vendors agreement.

Thank you Granny23 and glammanana, I think a visit to our financial adviser is needed. I had just wondered if anyone else had done the same.

Minimama I would imagine when you do sell either to your son or another party you would want full market value for the property,as your son has been paying you a subsidised rent possibly with a view for that amount to be classed as his deposit remember that any Building Society or Bank he goes to for the balance will expect his earning to stack up to their critiera or he could be refused funding.
Be very careful as to how you proceed.

It was a very long time ago but when we first applied for a mortgage our 'rent book' showing everything paid up to date and always on the due date, was accepted as evidence of our ability to pay the mortgage. There must still be some way of using this as most 1st time buyers will be in rented accommodation.

Thank you janeainsworth , we would like him to buy the property and wondered if there was a way of giving him the deeds legally whilst paying us back.
We aren't trying to dodge the tax man- I understand there may be CGT, but wanted to lessen the burden on him paying solicitors, mortgage advisers etc.

I’m not quite clear what you are proposing here - is it that at some stage in the future, your son may buy the property and you will then discount the rent he has paid up to that date?
I think you need proper legal advice as to the best way to proceed, in both yours and your son’s best interests. There will be tax implications when you do sell the property and it may be that you can minimise capital gains tax liabilities if you go about things in the right way, or conversely, end up with a big bill if you don’t.