Would I meet the criteria as a first ime buyer?

Londonjoe

Hi guys,

I'm looking for a two bedroom flat in Harrow for £250k.

A couple of days ago my parents transferred the deeds of their house (which has no mortgage as it has been fully paid off) into my name. Would I still qualify as a first time buyer as I have never bought a property or anything before?

Also, do i still qualify for the stamp duty exemption?

GavB79

Just kick them out of your house and live there?

Londonjoe

Ha ha, can't do. My father isn't well and wanted to transfer it to me before his health deteriorates further as he has got more than a couple of years left. He wanted to have it done before he is unable to.

But i want to buy my own place and so am really worried now about the stamp duty exemption and getting a decent rate on a mortgage.

sonastin

You might qualify for mortgage lenders' "first time buyer" products - they all have different rules so you'll have to check with a particular lender - but you won't qualify for the stamp duty exemption now that you own property.

System

You won't get exemption

If you are a first-time buyer the threshold for when you start to pay SDLT is £250,000. This is only if you have never owned a house or flat in the UK or anywhere else in the world.

McKneff

Londonjoe wrote: »

Ha ha, can't do. My father isn't well and wanted to transfer it to me before his health deteriorates further as he has got more than a couple of years left. He wanted to have it done before he is unable to.

But i want to buy my own place and so am really worried now about the stamp duty exemption and getting a decent rate on a mortgage.

Did you look into all the implications of this before he changed his deeds.

If he has to go into care within the next 7 years or wants to claim any benefits he will still be treated as if he still owns the house and you will be liable to pay for it. So it all may backfire on you both

Have you looked into the implications of Capital gains tax when you own two properties.

Londonjoe

Hi there McKneff,

I have to say that my father did not look into the implications before he did it.

Can you point me in the direction of the 'Capital gains tax rules' so that I can have a look?

McKneff

I think you would have to google it. As far as I know, the capital gains tax comes in when you actually sell your 2nd house

I would also google 'deprivation of assets re the 7 year rule.

Hope it doesn't open a can of worms for you.

p00hsticks

McKneff wrote: »

As far as I know, the capital gains tax comes in when you actually sell your 2nd house

... or more precisely, a house which isn't your principal residence. In the case of the OP, even though he only owns one house, if he isn't actually living in it then he may well be liable for Capital Gains Tax on any profit made when he comes to sell (i.e. the difference in price between when the property comes into your possession and when you sell).

for this reason, it's important to ensure that you have a written impartial confirmation of the market value of the property at the time it was transferred into your name.

I'm not an expert, but I believe that it is also the case that unless your parents now start paying you a market rent to remain in the property, HMRC will treat the transfer as a 'gift with reservation of benefit' and therefore may still fall into your father's estate for inheritance tax purposes.

If you and your parents didn't get professional advice prior to doing this transfer, I think you need to now.

Londonjoe

Hi guys,

I had the house valued by an estate agent and it falls well below the inheritance tax threshold and am not bothered about that as i don't feel it applies in my case.

If i moved out into a flat why would I have to charge my own parents rent, sorry I don't understand this part.

p00hsticks

you don't HAVE to charge your parents rent.

But if you don't, my understanding is that HMRC may say that the transfer has been done purely in an effort to avoid inheritance tax, and will therefore treat it as still being part of your fathers estate after his death. At the same time, they will treat it as belonging to you from the time of the transfer for the purposes of any Capital Gain Tax calcualtion, so oyu can end up getting taxed two ways.

If this isn't a concern, then no problem. [although note it's the value of his entire estate you need to consider, not just the house ]