She has obtained the mortgage through a broker who have provided a solicitor, and who have advised to dispense of our solicitors and has explained that as we were transferring the equity our solicitor would incur more cost.

My daughter is also trying to avoid paying stamp duty. Is this action legal and who holds the money on our behalf? I am rather confused and concerned, as I do not want to end up with no house and no money.

Your plan holds a number of pitfalls. Firstly, you are deemed to have sold the residence at market value for CGT purposes- although this will not be a problem if it is your principal private residence and has been throughout your ownership.

Secondly, you must be aware that the undervalue is deemed to be a potentially exempt transfer for IHT purposes- so if you survive seven years from the date of gift the £250,000 gifted will drop out of your Estate for IHT purposes.

Thirdly, i am not sure whether you intend to continue to reside in the property- if so, then you will in all likelihood fall foul of the pre-owned assets legislation. If you are considering this course of action you need advice.

Fourth, you cannot do this transaction without a solicitor- you are selling and your daughter is buying the house and the deeds, etc, must be changed. You should never take legal advice from a mortgage broker! (unless they happen to be a qualified solicitor, of course).

Fifth, your daughter will be liable for stamp duty on the value of the transaction.

You need to talk to a solicitor about this, as if the sale price is £249,000 you could potentially save a considerable amount of stamp duty. You cannot avoid stamp duty on this transaction as far as I am aware.

Six, I do not understand your statement about who would hold the money as you have not indicated where the money is going to. I assume you mean the money to pay for the house will be sent from the mortgage company to the solicitors- it is very unlikely that they would pay it anywhere else.

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