All happy with house deal kept in the family: Mary Wilson tells how a son solved his parents' home sale problems

James and Marjorie Davis lived in a large seven- bedroom house in Hertfordshire and wanted to move to a much smaller, manageable flat.

They had been trying to sell the house for two years. The price had plummeted to half its original value and they had spent a hefty sum on solicitors' and surveyors' fees.

Then their son had an idea that solved the problem and suited them all. Guy Davis, a stamp dealer, lived in London with his wife Jane and children Harriet and Georgina.

'We lived in a typical Fulham home, a terraced four-bedroom, two-bathroom Edwardian house,' he says.

'We had been thinking about moving out of London for some while and going to Hertfordshire near where my parents lived, but the price difference between our house and the sort of thing we wanted in that area was just too large.

'My parents had been trying to sell their substantial house for a couple of years with no success. It was originally put on the market at pounds 650,000.

'They kept on getting offers, but they all fell through as people had trouble raising the money and the price got lower and lower, eventually dropping to pounds 375,000.

'What they wanted was a much smaller flat in a converted period house and, because they thought they had a sale for their house, went ahead several times with surveyor's reports and incurred solicitor's fees looking at properties for themselves.

'The house is set in about an acre and a half and was just the sort of thing my wife and I would love to live in, but never dreamed we would have the money to do so.

'I reckoned we could sell our house at a rock-bottom price pretty quickly, so suggested to my parents that we bought their house at exactly half of pounds 375,000.

'This meant they could move into the flat they desperately wanted and we would have the chance of living in a beautiful family home at a price we could afford.

'We signed a contract that we would either buy the other 50 per cent within five years or, failing that, would sell the house after that time and split the proceeds - the idea being that the market might have risen by then and we might both make a little profit.

'I asked lots of estate agents to value my house and they all said around pounds 170,000, so I gave it to one agent at pounds 150,000 to get a quick sale and that day they produced a cash buyer. It sold in seven days and we all got what we wanted.'

The Davises wanted to do the deal in a way that would reduce any likely capital gains tax James Davis might have to pay. As his parents had lived there before, they qualified for three years' capital gains tax exemption as previous owner- occupier.

Charles Rees, a chartered accountant specialising in tax, says: 'With a small amount of planning they should effectively not have to pay any capital gains tax. This may involve reoccupying the property before selling it, making use of each of their personal allowances and further exemptions to former owner-occupiers.

'What people do not appreciate is that the Revenue looks at capital gains over the whole period they owned the house, not just when they were away from the property, and apportion the gain.'.

Guy Davis says that since they have done the deal several of his parents' friends who are having similar problems are thinking about trying to do the same thing.

Jackson, Stops & Staff's Chichester branch has come up with a series of unusual options for a house at Oving, West Sussex. This six- bedroom house is on the market for pounds 500,000, but agents and vendor have widened the possibilities to find a purchaser.

They are happy to take an exchange for a smaller house, saving them paying stamp duty if the difference is less than pounds 60,000.

They have divided the property into lots to attract people who might not want to spend so much. House, pool and immediate garden could be bought for pounds 395,000, more garden and outbuildings for another pounds 30,000 to pounds 45,000, walled vegetable garden around pounds 25,000 and tennis courts (with planning gain) for pounds 50,000- pounds 55,000.

(Photograph omitted)