Buying house from mother for mortgage value only

[m1ch8ll8]

I am in a little bit of a mess as I am struggling to work out what the best approach is to buying the property I live in from my mother.

Ten years ago I could not get a mortgage as I had just had my son. My mother was in the process of buying another property and selling her PPR. I convinced her to get another mortgage on this property so that I can remain. So.......ten years later. I am looking to buy the property for the mortgage value £150. I have been told I can have that. Fine. However, there will be CGT implications in my mother's name, but I need to scramble the money to pay for that as it was my persuasive tactics years ago to keep the place. What is the best to do it? I have been told that I can buy it for mortgage value and the rest would be considered an equity gift.

How do I work that out? The property is worth around 420K now. What is the lowest value and what would the CGT be on this?

She lived in the property for 23 years as her PPR (so did I)
For the last 10 years I have lived in it alone.

She bought it for around 30K back in 1983/4
Value now, roughly 420K

(I worked out the fraction in months as instructed by the tax website was 294/414 which meant that around 120K would be liable for CGT)

HELP! I just need to the property in my name somehow an be paying the mortgage so that it is legally mine. I want to pay someone to sort it but need someone with a good knowledge and imagination to make it legal but as cheap as humanly possible. I have heard of people selling properties for very little to children, I have heard of people parents retaining a 1 percent interest and the child having 99 percent...but I just simply do not know what to do. This is my home and has been. I transfer the money for the mortgage alone and have been paying it for a decade, so there is no profit for my mother in terms of letting on paper. Is there a way that we can use lettings relief to make it less? It's too complicated for me to work out.

I am not sleeping thinking about it all.

[pawncob]

Gain is approx. £101k (subject to annual allowance). The gift will be at current market value. No letting relief available as she didn't let it.(Unless you paid the mortgage from the start and this could be deemed as in lieu of rent.) Did she make tax returns and declare the income?

[m1ch8ll8]

Gain is approx. £101k (subject to annual allowance). The gift will be at current market value. No letting relief available as she didn't let it.(Unless you paid the mortgage from the start and this could be deemed as in lieu of rent.) Did she make tax returns and declare the income?

Thank you so much for your response. I am sincerely grateful I have a week off school and have been walking around in a stressed out daze trying to gather information before I pay someone.

As she is retired, it is 18 percent I am let to believe. So in that case would be just over £18K CGT?. The annual allowance, how would I work that out? Is it the £11,100 figure?

I have been paying the mortgage from the start but it has literally been me just transferring the mortgage payment with around £11 left over which got eaten up by insurance. She hasn't declared an income as there hasn't been one.

Michelle

[TQM2]

The % rate will be based on her income and how much of her basic rate band will be used up. Some of this will be at the higher rate of CGT (28%)

With regards to the contributions you made towards the mortgage, was any paperwork drawn up to say what the arrangement was? Could it be viewed as rental income? How much was the payment you made and the interest element of the mortgage payment?

[m1ch8ll8]

The % rate will be based on her income and how much of her basic rate band will be used up. Some of this will be at the higher rate of CGT (28%)

With regards to the contributions you made towards the mortgage, was any paperwork drawn up to say what the arrangement was? Could it be viewed as rental income? How much was the payment you made and the interest element of the mortgage payment?

She has retired so has no income other than her pension. We did not draw up any paperwork as she is my mum and it is just an agreement between us. I have been paying the interest only mortgage which is just under £200 per month and there is nothing left after than other than a few pounds which covers the insurance. I have been transferring that into an account in her name which I manage and the mortgage is debited from that account. It could be viewed as rent I suppose but there is no profit and it hasn't been declared as a result.

[pawncob]

If it's a repayment mortgage, there will be a profit. If she'd made returns it would be evidence.

[m1ch8ll8]

If it's a repayment mortgage, there will be a profit. If she'd made returns it would be evidence.

it's an interest only