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Transferring mortgages

edited 30 November -1 at 1:00AM in Mortgages & Endowments
4 replies 1.8K views
PadburyPadbury Forumite
2 Posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
My girlfriend and I currently live in a flat owned by her parents. We want to take over the mortgage but are not sure on the most tax effecient way to do this? Is it by her parents selling the flat to us at a knock down price and pay the capital gains, them giving some of the flat to my girlfriend as a gift in kind or some other way???

The current mortgage is worth £100 000
The current value is £130 000
Girlfriend's dad earns £60K+
Girlfriend's mum earns £15k

Please help ???

Replies

  • lisyloolisyloo Forumite
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    They can sell the flat to you for £100K and give her the rest.
    If they don't die within 7 years then there will be no tax to pay on the gift. If they do die in the 7 years, then there will be some inheritance tax to pay. The amount will depend on how far into the 7 years you are but could be up to 40%.

    What are your incomes?

    The parents incomes are irrelevant.
    If you take over the mortgage then the lenders are interested in your incomes not the parents.

    Do you earn enough to support a £100K mortgage?
  • Cheers for such a quick response!!

    My income is £20500 and my girlfriends is £19000.

    Am I right in thinking that if they sell us the flat at £100 000 then give us the rest no capital gains will be outstanding as no profit has been made?

    Thanks
  • divadeedivadee Forumite
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    The inland revenue have lots of info on their site.

    ClickHere.

    That might be of some help to you. :)
  • lisyloolisyloo Forumite
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    My income is £20500 and my girlfriends is £19000.

    You shouldn't have any problems getting the mortgage on that information if you both have employment.
    Am I right in thinking that if they sell us the flat at £100 000 then give us the rest no capital gains will be outstanding as no profit has been made?

    Not necessarily.
    It doesn't depend on the value of the mortgage, it depends on what they bought the house for (of course these might be the same but not necessarily).

    Also not sure of the legality of selling something at a knock down price to avoid CGT.

    What I think we were talking about earlier was them seeling you 77% of the house (£100K/£130K) at market rate and giving you the rest for free).

    Therefore they would still have made profits i.e that share of the house has gone up from £77K to £100K.

    I think you need to find out whether you can legally sell something at a knock down price to avoid CGT.

    They can certainly give you stuff tax free (if they don't die within 7 years).
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