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Where Taxpayers and Advisers Meet

Taking ownership of a property..

Ali85
Posts:3
Joined:Tue Jul 18, 2017 11:15 pm
Taking ownership of a property..

Postby Ali85 » Tue Jul 18, 2017 11:40 pm

Hi,

First time on here and potentially a first time 'buyer'. Hoping someone will be able to give me some advice.. Or point me in the right direction at least. Thanks in advance.

My mother owns a property, currently valued around £500k. The outstanding mortgage on this is approx £250k. Due to some financial problems in the past, the mortgage is interest only as has been for nearly 10 yrs.

I am interested in taking ownership of the property. I currently reside in the property, as does my mother and there isn't any plans for this to change. This is the only property she owns. There will not be any physical transfer of money between us 2, she is effectively handing down the property to me.

What I'd like to do is to take out a repayment mortgage and I'm trying to find the most cost effective way of doing this. Having spoken to a few people I understand the options are a) adding my name to the title ie joint ownership and then remortgage b) sale and purchase between us two. Are there any other options?

Also I'd like to try an understand what the SDLT, IHT and any other tax implications are here for both of us.

Appreciate it may not be the easiest to answer and may be some information missing so thanks once again and fee free to ask if you need more details..

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

Re: Taking ownership of a property..

Postby maths » Fri Jul 21, 2017 1:19 pm

I assume your name will need to be on the legal title with mother in order to be able to remortgage.

Unless mother has significant other assets IHT seems unlikely to be a problem.

I assume this is your and mother's only property.

Add your name to legal title with current mortgagee's permission and you and mother then execute a declaration of trust under which mother owns say 60% and you 40% beneficially. No SDLT as "deemed" consideration below £125,000.

No CGT or IHT implications on gift of 40%. On her death she leaves the 60% to you.

Ali85
Posts:3
Joined:Tue Jul 18, 2017 11:15 pm

Re: Taking ownership of a property..

Postby Ali85 » Mon Aug 14, 2017 2:01 pm

Hey maths, thanks for the response - some follow up questions..

Are the taxes calculated off the value of the property on the mortgage (240k) or would it be off the market value of the property (500k+)?

Also, in the event something happens to my mother, what taxes would I be liable to pay to take full ownership of the property? She is currently in good health, and hopefully for the foreseeable future too.

Thanks in advance.

Saadi


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