I need some advice - will try to keep things as short in detail as possible but covering all important elements...
In July 2007, my father purchased a 3 bed property for me but as I was only 19 years old the property was bought on my fathers name (especially as I wouldn't have been able to gain a mortgage due to being a full-time student). At this time I was living with my parents.
My father and I had a verbal agreement at the time of purchase that this property was mine and when I would eventually move in after getting married, I would be liable to pay whatever the monthly mortgage amount would be and it would be my responsibility to keep the house maintained. However until the point I would move in, my father would be liable to pay the monthly mortgage payments and would be the recipient of any rental income (therefore any profit or loss would be his and any subsequent tax liabilities).
In May 2012 (after getting married in July 2010), me and my wife finally moved out of my parents house into this 3 bed property on a full-time basis. From this date onwards as per our agreement, I started to pay the monthly mortgage payments due on the property. Each month I would make a bank transfer into my dads bank account so that the mortgage payment could be taken. As we speak this process has been happening every month since May 2012.
Now I want to transfer the property into my name (as does my father) as this has always been the intention from the date the property was purchased.
The current market value is £400,000 and the property was purchased for £230,000. We spent around £30,000 at the time of purchase to carry out necessary improvement works to the property including adding a small conservatory and a medium sized brick outbuilding at the back. The property has £200k mortgage outstanding with 8 years left on the term.
I'm a higher rate tax payer and don't have any other properties so will get a mortgage very easily.
The ultimate question that I have is what would be the best way to transfer legal ownership of the property over to my name. My father is concerned he would be liable for CGT even-though the property has never really been his.
Can you please advise the best way to avoid having to pay any taxes (or as little as possible) especially thinking about CGT and Inheritance Tax. My dad is a basic rate tax payer.
Thanks in advance for your help on this matter.