second home held in trust.

Booradley_2

I am a homeowner jointly with my wife. My mother exersiced her right to buy her council house (10years ago). I paid the deposit and the mortgage but the home is registered in my mothers name. We had a trust deed drawn up, but I don't understand what that is or how it works. The solicitor said it was standard practice and he had done hundreds. I think it was to avoid capital gains or inheritance tax and to protect the house if my mother had to go into care (she is fit and well aged 84).
There is now no mortgage on the property.
Where do I stand?
Is it my house now?
If not, will it be mine automatically when my mother passes on?
Can I sell it in the future without capital gains tax?

Boo

Booradley_2

I decided to buy the house for several reasons:
A 20 year old property in a largely private residential estate.
My mother could get maximum discount under the right to buy scheme.
So I would obtain a good property at 60% below market value.
I could allow my mother to live rent free for the rest of her life
I would inherit said property

The solicitor had seen all this before and drew up the appropriate agreement. My limited understanding was that I actually owned the house but that it was being held in trust by my mother.Hence when she was no longer with us the house (which was already mine, but held in trust) had no legal or other obligations upon it. To repeat there is no debt on the house.
I had no thought of this business were the state or carehome take your property to pay for your care but I think the mortgager (who advised me to the slicitor for the trust deed) had thought of that.
My questions are:
Who owns the house now?
Do I own it when my mother passes on? Surely yes?
Can I sell it without any CGT or other taxes?

Boo

Trollfever

A £3 search on the property at the Land Registry should reveal more.


.

theartfullodger

My questions are:
Who owns the house now?
Do I own it when my mother passes on? Surely yes?
Can I sell it without any CGT or other taxes?

- Depends how the trust deed is worded..

Sorry, it's a bit like saying "I bet on Hungry-Hayeater in the 3:15 at Doncaster have I won"- err... sorry, it depends on the bet (If you bet for a win/place/to lose/come 7th...). Hope I'm not being too blunt.

Cheers!

Lodger

socrates

Speculating here - but I would imagine that after the property was bought with a discount - there would have been a 2-5 year period before it could be re-sold, rented or transferred (which is where you come in)

The deed probably stated that after this qualifying period was over the property could be transferred into your name.

Anyway if I was doing this 'deal' that is what I would have done.

So until you or your solicitor informs the Land Registry then it will remain in your mothers name.

Now you need to action the whole matter BUT it needs to be done as tax efficiently as possible.

Solicitor or accountant or both should be involved.

Lets us know what the deed actually stipulates

Booradley_2

socrates wrote: »

Speculating here - but I would imagine that after the property was bought with a discount - there would have been a 2-5 year period before it could be re-sold, rented or transferred (which is where you come in)

Quite correct. The discount made the house cheap. I got a cheap property and mum got to live the rest of her life without rent.

Probably going to contact the original solicitor for advise. Meanwhile will look for the trust deed

Boo

GDB2222

theartfullodger wrote: »

- Depends how the trust deed is worded..

Precisely. So far, it's been a bit like saying: "I've got a book, which I haven't read, and I can't remember the author or title. Please tell me what it's about."

Booradley_2

The Relevant part of the Deed says:

Now this deed witnesseth that M* (mum) holds the said property for an estate in fee simple Upon Trust for K* (me) in equity and upon the expiration of three years from the date hereof M* will at the request and cost of K*execute such transfer as K* may request

Boo

simpywimpy

My father owns my house and should he sell or transfer it to me now he would be subject to capital gains tax on the increase in value. He has however left it to me in his will to avoid this. I was told by both an accountant and a solicitor that this would be the only way.

I also paid the deposit and all the mortgage on my dad's house that paid for it but at the time, I couldnt get a mortgage of my own

socrates

So - I assumed correctly!!

Now all you need to do is make sure you do it in the most tax efficient way possible.

One other question - is she claiming any benefits?

zzzLazyDaisy

You need to take legal advice but normally the most tax efficient way to transfer the house would be for your mother to leave it to you in her will. That way there will be little or no IHT to pay (depending on the value of her house and any other savings/assets she has).

That way any subsequent sale will attract CGT only on any increase in value after your mother's death.

If it is transferred to you in her lifetime, CGT will be payable on any increase from the date of the transfer. Since (presumably?) the intention is that your mother will continue to live in the house anyway, there doesn't seem to be much point in bringing forward the trigger date for CGT.

But, as I say, you really need legal/financial advice on this.