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Where Taxpayers and Advisers Meet

selling hmy house CGT on a none resident

technomate20122
Posts:7
Joined:Thu May 30, 2024 5:36 pm
selling hmy house CGT on a none resident

Postby technomate20122 » Thu May 30, 2024 6:02 pm

Hello, in 2006 I had 30% of the value of a house and I bought it as a buy to let, it was the only way to get a mortgage. 4 years later I remortgage the house with a residential mortgage and my broker recommended to put someone else in the property registry so that it would be accepted by the lender. My father was added to the deeds as a join tenant. He has never contributed financially in any way neither have any interest in the property ! and only now when I am going to sell the house where I have always live in (no mortgage) I do realise that it was a mistake and I am worried trying to clarify what is the best way to preceded incurring in the less posible financial loses.
If I removed my dad from the property register, would his share be subject to CGT, correct? Would those CGT be the same amount as if we were selling the house? If that were the case, I would prefer to follow that path.
To sell the house I need to make a lasting power of attorney because my dad cant travel to the UK heathy reasons. The cost is £1500 + VAT and it can take up to 6 months.
I am trying to find the best and fastest way to sort this in case my dad dies and I have to pay inheritance tax, which I think will be much more.
Could you advise on this point please?
thank you

bd6759
Posts:4328
Joined:Sat Feb 01, 2014 3:26 pm

Re: selling hmy house CGT on a none resident

Postby bd6759 » Fri May 31, 2024 7:58 am

You say your father had no interest in the property. Just make sure that is recorded in writing and you will be ok.

technomate20122
Posts:7
Joined:Thu May 30, 2024 5:36 pm

Re: selling hmy house CGT on a none resident

Postby technomate20122 » Tue Jun 04, 2024 1:40 pm

My dad made a declaration of solvency in english with a notary (in a European country) in which he transferred his 50% of the property to me for £0, passing 100% of the house to me but it was never registered in the property registry so I understand that he is still the legal owner of half of the house, if I sold the house now would my dad's 50% be subject to CGT? If my dad died now, would I have to pay inheritance tax on his part?
thaks you

bd6759
Posts:4328
Joined:Sat Feb 01, 2014 3:26 pm

Re: selling hmy house CGT on a none resident

Postby bd6759 » Tue Jun 04, 2024 7:30 pm

CGT is charged on the beneficial owner, not the legal owner.

If you have a document of any kind, it will serve as proof of beneficial ownership.

maths
Posts:8527
Joined:Wed Aug 06, 2008 3:25 pm

Re: selling hmy house CGT on a none resident

Postby maths » Tue Jun 04, 2024 7:45 pm

You say that your father was added to the "deeds" which means that he and you owned the legal interest as joint tenants. Usually at that time you would both have executed a Declaration of Trust which would specify the % you each owned of the beneficial interest. Presumably there was no intention that your father would own any of the beneficial interest which would thus have remained yours as to 100%.

Having said this you then appear to contradict the above by saying "My dad made a declaration of solvency in english with a notary (in a European country) in which he transferred
his 50% of the property to me for £0,

Other things being equal the sale (ie transfer of legal title) would be by you and your dad but only you would be transferring any beneficial interest (ie 100%). In which case your dad has no CGT liability here in UK.

Probably a good idea to get a solicitor to recount that at the time your dad was added to the "deeds" it was intended that he would not acquire at that time any beneficial interest.

AGoodman
Posts:1797
Joined:Fri May 16, 2014 3:47 pm

Re: selling hmy house CGT on a none resident

Postby AGoodman » Wed Jun 05, 2024 2:32 pm

You need to sit down with a paid adviser to sort this out. it should be relatively straightforward but could easily go wrong if you try to find a solution yourself based on forum answers.

For example, your father will need to sign to sell the property (or transfer it to you). There is no need for an LPA at all. He could just sign the TR1 (transfer form) personally with any witness or grant somebody a regular power of attorney. Even a full LPA should not usually cost £1,500.

The only way an LPA might be needed would be if you intend to leave your father on the title until sale but sale might be some years away so he could lose capacity in the meantime. That probably isn't a good solution.

technomate20122
Posts:7
Joined:Thu May 30, 2024 5:36 pm

Re: selling hmy house CGT on a none resident

Postby technomate20122 » Fri Jun 07, 2024 10:17 am

thanks you everyone for your thoughts
@ Maths
"Usually at that time you would both have executed a Declaration of Trust which would specify the % you each owned of the beneficial interest. Presumably there was no intention that your father would own any of the beneficial interest which would thus have remained yours as to 100%."

This is exactly what happened, my father was added on the deeds of the house as a Join tenant (i called to the land regtister and they confrim this) and the notary made a declaration of solvency in which he basically said...
it is intended that said property be transferred from joint names (my father and I) to my sole name for £0.00. The purpose of that transfer is not to avoid creditors...
and he emphasizes that my dad is not in a bad situation financially.
The problem that the seller soclicitor tells me is that this declaration was not registered in the property registry and that is why legally we are both tenants with 50% each.

My question is whether this solvency statement would have any validity if it was made 10 years ago.

I have contacted a tax accountant who will do the calculations but it is very difficult for me to find a person who can guide me clearly on this issue. Could anyone advise a professional on this issue?
thank you again

bd6759
Posts:4328
Joined:Sat Feb 01, 2014 3:26 pm

Re: selling hmy house CGT on a none resident

Postby bd6759 » Fri Jun 07, 2024 9:30 pm

I refer you again to this:
CGT is charged on the beneficial owner, not the legal owner.
You father has no beneficial interest. That is documented. It could be documented on the back of a fag packet, it doesn’t need “registered” anywhere.

The property is held in your joint names for your sole benefit. As long as that is confirmed in writing you are good to go.

someone
Posts:714
Joined:Mon Feb 13, 2017 10:09 am

Re: selling hmy house CGT on a none resident

Postby someone » Mon Jun 10, 2024 7:57 am

One thing I'm not sure of here is whether the property is held beneficially as joint tenants or tenants in common. The legal title is always held as joint tenants and it's not clear if that is what the OP is talking about.

I don't think it's possible in law to be a joint tenant beneficial owner and not have a beneficial interest. I think, by definition, joint tenants are equal owners. If this is the case and it was a mistake then this should be rectified by severing the joint tenancy and ensuring that the actual beneficial ownership is documented. If there is existing documentation stating that the beneficial owner was always only the OP then holding as JT is obviously a mistake, but if there isn't then HMRC might decide to challenge the severing as being a CGT event that transferred value to the OP. How easy to rebut that challenge will be might depend on how good the documentation is when the property was originally purchased.

Whether the property is held as JT or TiC is recorded at HMLR.

technomate20122
Posts:7
Joined:Thu May 30, 2024 5:36 pm

Re: selling hmy house CGT on a none resident

Postby technomate20122 » Mon Jun 10, 2024 3:10 pm

I bought it in 2006 and added my father in the deed in 2009 when I remortgage the house, a declaration of solvency was made with the Hague Apostille in which it said it is intended that the said property will be transfered from the join names to to my sole name etc ...
the house is in join names


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