Am I liable for CGT when it is my sons property

[HT69]

My son was initially finding it difficult to get a mortgage so his financial advisor suggested I (his father) should support him with the mortgage and therfore also put my name on the deeds.

However the deposit and all other expenses to date was made by my son.

The property has been let out over the years.Last year my son asked his mortgage company if they would approve the mortgage solely in his name and they approved.

A transfer of equity took place and the deeds are solely in my son's name now.I always said the property belong to him as all money and expenses had been made by him and we should correct the ownership situation.

I have therefore made no gain at all.Am i still liable for Capital Gain Tax??And does Inheritance tax applies??

[bd6759]

Was the loan in joint names?

[AnthonyR]

What probably should have happened at the time of the purchase is that your solicitor should have drafted a declaration of trust showing that you were holding the legal interest on trust for your son. However, in my experience these things are often missed by conveyancers who are just focused on getting the job done.

In theory you would have had an implied declaration of trust meaning that you did not have a beneficial entitlement and on the transfer you simply transferred the share you were holding on trust for your son.

It won't be bullet proof, but I'd suggest putting together a statement between you and your son to that effect in case HMRC ever challenge the position.

[maths]

A transfer of equity took place and the deeds are solely in my son's name now

Are you saying that at the date of the original purchase in joint names (on the legal title and the mortgage) a declaration of trust (on the TR1 or separately) gave you a beneficial interest?

If not then no problem arises on the subsequent removal of your name from the legal title and mortgage.

If you were initially granted a beneficial interest then prima facie you have made a subsequent disposal for CGT.

Who received the rental income and declared it on their Tax Return?

Arguing an implied trust may be somewhat difficult if you were shown as a beneficial holder.