Stamp duty - to knock or not to knock?

Hi

This is a mixture between Mortgages & house building, so feel free to move if you feel it's incorrectly placed!

Brother and I buying parents' (1970ish) house (all currently one happy household!). Just came to realisation over the w/e that house is over 125 sq mtrs (approx 140 sq mtrs) (we're FTB's). There is an extension out the back of the house, which is in poor condition - the floor is currently dug up (ready to be re-poured etc), there's a flat roof which would need to be changed to a pitched roof.

Renovating it will probably cost about 15k on its own (conservative), and because of its existence, we'll be paying stamp duty of 6k. However, if we invested this money into it, we'd get three rooms (bed, shower rm/wc, utility) out of it. Is it worth keeping, or should we just knock the darned thing?

Any advice appreciated.

The size of the house is irrelevant as this is a second hand house. The relevant aspect is the current market value of the property. What is that?

If you have a crap extension and you knock it down before you buy, will that affect the current market value?

On a separate but important note - will your parents continue to live in the house? Have they had independent legal advice? Will they reserve a right of residence in the house? Thats a problem if you and brother are getting a mortgage?

mf

Hi

Similar houses in estate are going for between 285-310 depending on condition. Knocking it would probably affect cmv (down the way), but not much (we're not paying cmv btw, just 200k, but I see what you're saying - it's not worth > 317.5, so we're okay?).

Parents won't be living in the house ... moving to another house. I know they haven't had legal advice, but am sure they wouldn't be interested in paying solicitors any more money than they have to (believe me on this one!!). We will have a granny flat in the house, so if the worst came to the worst, we would put them up in later years if we need to.

Financial institutions didn't mention there would be any problems when we went in.

Don't know if you're any the wiser after that?

On stamp duty you're fine. You will probably need a current market valuation from auctioneer - the deed will still have to be presented to Revenue and while its not stampable, any property which is close enough to stamp duty thresholds may attract Revenue attention.

On the related note, viz. parents moving on, selling at less than market value, essentially making you a gift of E100K, not wanting independent legal advice, etc.,etc I always have a concern about people not being 100% clear in their minds about the full implications of what they are doing. Plus are they going to have a Capital Gains Tax issue - unless this is their prinicipal private residence?

mf

Thanks mf. Stamp duty didn't even enter our heads til we were in a financial institution last Friday. Chap there, having taken all the details (ie, knew it was 2nd hand and cmv < 317.5, our FTB status) asked us were we liable for stamp duty??? He even calculated it for us.

Anyway, great sighs of relief all round.

It is their ppr, so they're ok there. I guess that the financial institution that we eventually go with will require a market valuation for their information (which I believe we pay for anyway), so this should suffice?