Capital Gains Tax and Implied Trust

[stolonsi]

Hi,

5 years ago I purchased a property which at the time I need my mother to go on the mortgage as my income multiples weren’t enough.
So currently my mother and me are on the mortgage deeds and property deeds. My mother is also on the mortgage and property deeds of her main house which she owns with my father.

Me and my wife now want to sell the house and want have mortgage with myself and my wife, we no longer want my mother on the mortgage. We will use all the proceeds of the sale to contribute to the purchase of the new house.

We are concerned that my mother will be subject to a large capital gains tax bill as the property has increase in value by £140,000 in 5 years.

We have been told that we might fall within the Implied Trust, and possibly be exempt from CGT as this has been my primary house for 5 years and I have paid the mortgage myself and I haven’t given my mother any money for the privilege.

Can anyone shed any light on this?
It’s a real gamble as the HMRC aren’t giving us definitive answers so it’s a case of hoping and praying!

Many Thanks

[maths]

The CGT problem for mother could have easily been avoided if at the time of purchase your solicitor had advised that a simple declaration of trust be executed by you/mother (as owning the legal title) confirming that you owned 100% of the beneficial interest (or 99/1% in your favour as some solicitors advise).

The first issue to address is precisely what any documents at the time state eg what did the solicitor advise and/or put on the Form TR1 re the beneficial interests of you/mother.

If the TR1 confirms my opening comments then mother has no CGT problem.

Only if mother has a problem will it then be necessary to examine if there are any other options [the so-called "implied trust" option is by no means straight forward].

[stolonsi]

The CGT problem for mother could have easily been avoided if at the time of purchase your solicitor had advised that a simple declaration of trust be executed by you/mother (as owning the legal title) confirming that you owned 100% of the beneficial interest (or 99/1% in your favour as some solicitors advise).

The first issue to address is precisely what any documents at the time state eg what did the solicitor advise and/or put on the Form TR1 re the beneficial interests of you/mother.

If the TR1 confirms my opening comments then mother has no CGT problem.

Only if mother has a problem will it then be necessary to examine if there are any other options [the so-called "implied trust" option is by no means straight forward].

I think the beneficial interest is 50% each. What are my options if that is the case?