Cost of acquiring deeds

j_john · Postby **j_john** » Mon Jun 13, 2005 8:26 am

Sorry if this has been covered, but I had a quick look and couldn't find an answer.

My parents want to move one of their properties into my name in order for me to re mortgage, so I can buy a property abroad (can't use this new house for the loan). Their accountant suggested this could cost me around 40k and I was wondering if this is entirely correct. The house is worth around Â£200k and is virtually paid off. Any advice would be greatly appreciated.

Thanks.

King_Maker · Postby **King_Maker** » Mon Jun 13, 2005 9:03 am

The transfer could trigger a CGT liability.

In order to avoid this (assuming you do), all the parties would have to agree that the beneficial ownership remains with your parents, and this is merely a loan facilitating exercise. The paperwork needs to be drawn up to reflect this.

Cannot your parents borrow the money directly? This could have income tax advantages, if the property you are purchasing is for private rather than business use.

CDavey9501@aol.com · Postby **CDavey9501@aol.com** » Mon Jun 13, 2005 9:07 am

Â£40k?

Not unless it includes the CGT liability which your parent may have and/or the Â£40k includes the foreign taxes etc on the new property.

What is the breakown of this Â£40K cost?

j_john · Postby **j_john** » Mon Jun 13, 2005 11:17 am

Thanks.

I'll check out this beneficial ownership, but their plans were always to move it over to me.

Sorry - not sure of the breakdown of the Â£40k. I'll check it out but I assume it's the CGT.

What's the deal with it being moved as a gift and the liability dropping each year over the next 7?

Instinctive · Postby **Instinctive** » Mon Jun 13, 2005 12:04 pm

Regarding your last sentence, you are obviously referring to IHT liability on a PET if your parents die within 7 years of making the gift.

However, if the property is transferred to you as a gift, or sold to you at an undervalue, it is ragarded as a disposal by your parents at open market value. This disposal would trigger a CGT liability for your parents and this is what the accountant is most probably referring to.

To verify whether the figure of Â£40,000 CGT is correct, a lot more information is required, eg, who are the owners, their approx annual income, date and amount of cost, value now and how the property has been used from commencement to date.

Ramnik

j_john · Postby **j_john** » Thu Jun 16, 2005 7:02 am

The property is empty and has been since puschase (needs considerable upgrading). It's value would be approx Â£200k.

Would a PET, for my wedding, really be seen as a disposal?

Cheers.