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Where Taxpayers and Advisers Meet

Utterly confused/IHT/CGT Deed of variation

Keithy
Posts:1
Joined:Fri Mar 18, 2022 12:00 pm
Utterly confused/IHT/CGT Deed of variation

Postby Keithy » Fri Mar 18, 2022 12:02 pm

I’m going to put the following in bullet points to allow for better understanding. 

My brother, aunty & I bought a house in 2008. Aunt was the one who took out the mortgage with my brother and me making payments to her directly each month for our share of the payments. 

*In 2013 our Aunty died intestate and my brother and I continue to live here and continue paying the mortgage albeit in her name.

*Our grandmother inherited estate.  

*A deed of variation by my grandmother for the house to be passed to my brother and me.

*As of now my brother and I would like to sell the house but have found we are unable to as the mortgage is still in our deceased aunty’s name. 

*Advice was given that if we want to be able to sell the house we would need to get a mortgage on the property and then we would be able to put the house in our name and change the names with the land registry, even though we have a deed of variation.

*Currently, we are unable to get a mortgage as my brother has recently become redundant.

*The other advice given was that our grandmother could sell it and just transfer the proceeds.

*However, another family member pointed out that there might be tax implications.  

At this juncture, we are utterly confused and are unsure which route to take.
We don’t want to go down one route and end up being stung with a lot of tax when it could have been more efficient down another route. 

Questions:

Are there any tax implications anywhere? 

Which route is most efficient? 

If we managed to pay off the remainder of the mortgage, and then transfer it into our name and then sell it, would be best in terms of taxes? On the other hand, is it better to let our grandmother complete the sale?  

FYI: House bought in 2008 for circa £224K. Estimated current value: £520K (upper end).

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

Re: Utterly confused/IHT/CGT Deed of variation

Postby maths » Mon Mar 21, 2022 4:33 pm

Better if you post asking fewer but more specific questions.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Utterly confused/IHT/CGT Deed of variation

Postby bd6759 » Tue Mar 22, 2022 12:45 am

Even better to appoint a solicitor, as you should have done in 2013.

If the three of you bought the house, how did your grandmother inherit it? She could only inherit your Aunt’s share.

However, this was partly resolved with the deed of variation, providing it was properly executed. If it was done properly your Grandmother cannot sell it because she doesn’t own it. You own it, subject to the mortgage.

The mortgage should have been settled in 2013.

Basically if you inherited the property in 2013 and still live there there won’t be any CGT.

If the variation was not properly exercised your Grandmother will need to sell it. She will be liable to CGT, but will have the proceeds of the sale from to pay it.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Utterly confused/IHT/CGT Deed of variation

Postby AGoodman » Tue Mar 22, 2022 8:12 pm

This sounds like a mess.

I don't understand how the mortgage can still be in your Aunt's name unless nobody has told the lender that she has died. I also assume the property must have been registered in your Aunt's sole name if she was the only named borrower under the mortgage.

Essentially, the Administrator(s) of your Aunt's estate can sell the house. There is no need to transfer it first. The administrator(s) will settle the mortgage when the property is sold.

If nobody has taken out a grant then step one is to obtain a grant of letters of administration appointing an administrator(s). Your grandmother would be entitled to do this but could appoint you and/or your brother as her attorneys to do this on her behalf.

Basically, as BD says, appoint a solicitor to sort it out. None of this is particularly complicated but it is worth doing properly.


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