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Where Taxpayers and Advisers Meet

Transfer of Main Residence to my mother

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm
Transfer of Main Residence to my mother

Postby ritzy11 » Thu Dec 19, 2019 5:22 pm

Hi Guys, wondering if you can please help.

So me and my brother live with my mum and pay mortgage on the property. We also have 2 sisters that live with us and have been contributing equally towards the mortgage. So on a £1000 mortgage we all pay £250 each. But my sisters are not on the mortgage. This property has been our main residence for all of us.

Our plan is to pay off the remaining balance left on the mortgage equally and then transfer the full property under my mums name.

My mum will then create a "will" and put in her will to distribute the property equally between the 4 of us.

Would this have any tax implications on any of us. The value of our Property is approx £500k and my mum has my dads unused nil rate band as he passed away long time ago.

Any help will be much appreciated :-)

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Transfer of Main Residence to my mother

Postby pawncob » Mon Dec 23, 2019 12:26 pm

If the property isn't registered in your joint names(which would require a trust deed) then you're not "paying the mortgage" you're just contributing to household expenses.
It's not your PPR since you don't own any part of it.
It will form part of your mother's estate and IHT will be payable if that exceeds the lifetime exemptions available.
With a pinch of salt take what I say, but don't exceed your RDA

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transfer of Main Residence to my mother

Postby ritzy11 » Mon Dec 23, 2019 1:45 pm

Thanks for your help, just have a few more question if you could please answer them for us...

1) so once we transfer it over to my mum does that mean me and my brother as well as my sisters will be liable to pay IHT if it exceeded my mums lifetime exemption allowance?

2) Please can you let me know what the lifetime exemption allowance amount is for my mum considering she also has my dads unused nilrate band?

3) Would taper relief play any part in this if me and/or my brother didnt live for more than the next 7 years?

Thanks again :-)

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Transfer of Main Residence to my mother

Postby pawncob » Mon Dec 23, 2019 5:47 pm

Please explain who actually owns this property and how they acquired that interest. You speak of "transferring" it to your mother, but it seems she already owns it. presumably she acquired that interest with her late husband or on his demise. Please confirm the position.
With a pinch of salt take what I say, but don't exceed your RDA

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transfer of Main Residence to my mother

Postby ritzy11 » Tue Dec 24, 2019 9:40 am

Sorry should've been more clear. So at the moment the property is under my name, my brothers name and my mothers name. Me and my brother would like to take our names off the property and leave the property just under my mother's name. The idea is she would then make a will and put in her will to equally distribute the property between all four of us (me, my brother and my two sisters)

Me and my brother have our names on the mortgage
My father passed away before we got the property and had contributed nothing to it.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Transfer of Main Residence to my mother

Postby pawncob » Tue Dec 24, 2019 4:57 pm

That's clarified the position.
You can gift your shares of the freehold to your mother with no CGT implications as it's your PPR. SDLT may be payable on the transfer depending on the value.
The gift is a PET, so taxable if mother dies within 7 years, but subject to taper relief after year two.
Your mother's IHT exemption would be £475,000 plus however much is left from father's estate (assuming it qualified) This includes the £150k property exemption if the property is passed to the children.
With a pinch of salt take what I say, but don't exceed your RDA

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transfer of Main Residence to my mother

Postby ritzy11 » Tue Dec 24, 2019 8:42 pm

Thanks for your help on this, just a few more questions

I thought that stamp duty is only payable if the property has a mortgage attached to it. If we were to pay off the mortgage in full, would my mum still have to pay stamp duty?

My father only lived in the UK for a year before he passed away. Does this make any difference? He passed away in the 1990s

Cheers

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Transfer of Main Residence to my mother

Postby pawncob » Wed Dec 25, 2019 12:55 pm

SDLT is payable on the transfer value.
https://www.gov.uk/stamp-duty-land-tax
With a pinch of salt take what I say, but don't exceed your RDA


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