Can I dispose of half share in house?

MrsPorridge

I own a half share in a house with my Mum. She still lives in the house - i have not lived in it for over 18 years. My son lives with her together with his ex-girlfriend. No tenancy agreement in place and neither of them pay any rent.

No mortgage on house.

Relationship has broken down. I do not want my half share. Can I give it back to Mum without any tax implications for me.

Any advice ratly appreciated.

dancingfairy

Not easily I don't think.
You may not want anything more to do with the house but your mother will probably need to get a remortgage (if possible) in her name alone - the bank will not just allow you to come off the mortgage as they obviously have 2 people to chase at the moment if the mortgage goes unpaid.
Is there any equity or is it negative equity?
df

Annisele

OP says there's no mortgage on the house, so the bank shouldn't be an issue.

Capital Gains Tax might be an issue. That is paid when an asset is disposed of - not just when it's sold. The OP may be able to claim various reliefs (almost certainly can), but there is a possibility tax will need to be paid. That would depend on how much the house was worth when OP bought it, how much it is worth now, whether OP has ever lived in it, and lots of other things (I'm not an expert on CGT, so I can't give a full list).

MrsPorridge

Thanks.

No mortgage on house paid off before Ihalf was put in my name. House has gone up in value as is in London. Not sure but was bought in the 70's so value will be considerable compared to when it was bought.

Biggest problem is son and ex who may want to remain living there when Mum has gone. I have no relationship with them and do not want to support them and cannot afford upkeep of house. I am in my fifties and have own home with husband.

Am worried about them being sitting tenants and my being responsible for hours and council tax etc.

Mumwill leave her half of house to son.

BigAunty

MrsPorridge wrote: »

... Can I give it back to Mum without any tax implications for me.

.

I don't know about tax implications but those who apply for means tested benefits can be subject to an investigation for giving away their capital if the DWP/HMRC believe that it was motivated by a desire to claim benefits, to get under the threshold for capital to be eligible. It's known as deprivation of capital.

dancingfairy

ooops- I missed the bit about no mortgage - sorry.
I would assume that you would also need to be careful in terms of 'deprivation of assets'. My understanding is that if you needed to claim any menas tested benefits in the near future then they could assume that you gave the share in the house away in order to claim benefits. Hopefully you won't be needing any state help anytime soon but you might want to bear it in mind.
In terms of CGT etc perhaps the cutting tax board would be able to help as they have some tax experts on there.
Best of Luck
df

MrsPorridge

Am wanting to give away for reasons in my above post. I work full time always have and do not claim any benefits.

dancingfairy

I didn't mean that that was why you were doing it but more that if by some unfortunate circumstance you needed to claim that you may have to argue that it wasn't done for that reason. Obviously the fact you moved out/ haven't paid anything for 18 years is a pretty good reason.
df

00ec25

Capital Gains Tax

you have not lived in it for 18 years therefore you are certainly liable for CGT - please explain how your acquired it in the first place - did you buy, or did you inherit, your half share ? This determines the basis of your original cost and when the clock starts for the CGT calculation

option a) your hlf is returned to Mum

If you give for free (or sell for cash) your half share back to her that will create a "disposal event" and CGT will be due at the time of that transaction.

you are related to your mother and are therefore classed as a "connected person". This means that "sales" value used in the CGT calculation must be the full open market value at the time of the transaction, ie you cannot say it's a free gift or use a discounted value

there will be a complication in how you determine what is the market value as it is not the same as simply half of the house value. No one would buy half a house and a house with a resident co-owner is also going to reduce the value - ie you would probably need to get a specialist valuer to advise you

option b) mum and you agree to place whole property on market

Mum as resident owner in her main home will be free of CGT. You as non resident owner will incur CGT on your half of the value. Sold on the open market to a third party without your half going through Mum first there will be no problems with connected person rule or valuation basis - you will simply pay CGT on the differncne between what it sellls for and what it cost x 50%

current occupants

mum obviously is an owner occupier so cannot be forced out - if she will not willingly agree to sell (option b above) then the obnly way to force her would be to take her to court as only a court can force a sale if one owner resists


To create a tenancy either a written agreement has to be in place (which could of course be for zero rent) or, if no written agreement in place, then rent has to actually be paid - so son and ex appear to have no legal interest in the property. They have not paid rent to you or Mum therefore a tenancy has not been created. However, as you are not resident then turfing out your univited "guests" is not as simple as if you were resident - someone else wil have to cover that, I don't know the legal process there, for example if Mum leaves but they stay on they could be squatters

council tax

this is governed by the rules of "hierarchy of liability" this dictates who pays the bill in a very strict order - a resident owner comes first, a resident tenant comes next (not applicable in your case) then any resident even a squatter (possibly the stauts of son and ex if they stay on) and then only after all that lot comes a non resident owner ie. you! So Mum will be laible for 100% of bill as long as she is there , if she and son/ex all move out, you and Mum are jointly and separately liable, ie council can persue you or her for 100% - it is not split 50/50

MrsPorridge

OK thanks for all that. So if we leave it as it is then when mum goes what are my rights for forcing a sale? Will son be liable for CGT and inheritance tax?

00ec25

MrsPorridge wrote: »

OK thanks for all that. So if we leave it as it is then when mum goes what are my rights for forcing a sale? Will son be liable for CGT and inheritance tax?

sorry but unclear what you mean mum "going"? Do you mean she dies or she (willingly) vacates the property?

if the latter, then she will still be the legal owner of her 1/2 share and would either have to willingly agree to sell it or, if not, you'd still need to force her to sell via court

don't see where son/ex fit into that scenario - but if she instead gifts her share to son/ex whilst still alive and eitehr moves out or continues to live there then they would become the co-owner with you and your Mum would be in the same position re CGT as option a) on my first post

IHT
Remember IHT is payable by the estate not the beneficaries and only applies to estates over £325,000

a)Mum continues to live there until she eventually dies but transfers her share to son/ex whilst she is still alive - this is a Gift With Reservation. A GWR means Mum's ESTATE remains liable for IHT on the full value of the property at time of her death as she has continued to benefit from (live in) the asset she gifted. If the estate does not have the cash to pay the IHT (if any is due) then the executors of the will have the power to sell the house to raise the cash to pay the tax - who are the executors???????

b) Mum lives on but moves out and transfers her half to you or son or ex - this is called a Potentially Exempt Transfer. Under a PET Mum has to live for another 7 years after which time the gift is free of IHT. Son/ex are then the owners and are free to do with it what they want - if you want to sell your half you'd have to take them to court as they are the owners not your Mum

c) Mum dies whilst in residence and her will leaves it to son/ex - Mum's estate pays the IHT (if applicable) on her share and Son/ex inherit her half becoming co-owners with you so you would need to deal with them if you want to sell up your half