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Where Taxpayers and Advisers Meet

Change in property ownership

pleasetaxhelp
Posts:3
Joined:Thu Jul 30, 2015 11:31 am
Change in property ownership

Postby pleasetaxhelp » Thu Jul 30, 2015 11:39 am

Hi all

This is my first post so apologies if I do not include all the info required for a definitive answer.

I purchased a UK property back in 2007 and my parents had to join the mortgage to allow the mortgage to be approved and act as a form of guarantor. In turn they also become joint owners of the property.

The property is now let and I am looking to remortgage to a new buy to let mortgage. My parents have now retired and do not really need to be on the new buy to let mortgage as the income from the property covers the mortgage payments sufficiently. I am looking to remove my parents from the ownership of the property and for the property to be in my sole name.

Are there any tax implications I need to be aware of in doing this or any other implications to any party in carrying out the above change?


Many thanks in advance.

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: Change in property ownership

Postby Peter D » Thu Jul 30, 2015 12:45 pm

Your parents will have effectively disposed of their shares in the property based on the open market value. This will give rise to a CGT liability on each of your parents. How much did you but it for and what is it worth now. Did you have any trust document drawed up prior to purchase. ? Regards Peter

pleasetaxhelp
Posts:3
Joined:Thu Jul 30, 2015 11:31 am

Re: Change in property ownership

Postby pleasetaxhelp » Thu Jul 30, 2015 1:00 pm

Hi Peter

Thanks for the reply. There was no trust document drawn up.

Purchase was £205k, value now c £235k.

Could they not gift the shares to me or any other alternative arrangement?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Change in property ownership

Postby maths » Thu Jul 30, 2015 1:15 pm

If the idea was that the house was to be yours (100%) and you only needed your parents to help with the mortgage then you and
parents would own the legal title jointly but your solicitor should have asked how you wanted the beneficial interests (relevant for CGT) to be held
and then indicated this on the TR1 form he would have lodged with Land Registry i.e. 100% you and 0% parents.

Typically, many solicitors fail in their duty in this regard (in my opinion).

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: Change in property ownership

Postby Peter D » Thu Jul 30, 2015 2:22 pm

Gifting to you is still a disposal. However as the gain has only been £30,000 then the mas value each would be £10,000 which is below the individual CGT allowance of £11,100. I assume you lived in the property prior to you renting it out.
I concur with maths, solicitors should address this issue prior to purchase. Regards Peter

pleasetaxhelp
Posts:3
Joined:Thu Jul 30, 2015 11:31 am

Re: Change in property ownership

Postby pleasetaxhelp » Thu Jul 30, 2015 3:05 pm

Many thanks, I believe my query has now been answered.


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