I have a client who is "selling" a property to a friend for £350k. They will exchange contracts and he will receive £125,000 as a deposit and complete in 20 years time on expirary of the 20 year mortgage.
Will the capital gain for the £350k arise on exchange of contracts, or on completion when the property will then be placed in his friends name.
The mortgage will remain in my client's name and the friend will pay my client amounts equal to the mortgage during the 20 years. If the buyer defaults on the mortgage paymetns then my client can take back the property.
I believe the contract is conditional and reliant upon payment of the mortgage, so the capital gain will arise in 20 years time
Any thoughts greatly appreciated