capital gains nightmare-any way out??!!

browrich

My mother in law offered to purchase our house seven years ago as my husband could not get a mortgage. The deposit put down on our house was his money (given to him as a gift) but the mortgage is in just his mothers name (so as far as the law is concerned this is her house). We would like the house now put into our name and have been approved for a mortgage but as our house is his mothers second home (and we are classed as tennants!!) we have to shell out capital gains. Our house has made roughly 90.000 profit that we will be taxed on. Is there any loophole as we think the capital gains payment is going to be in the region of 26.000?. All taxes, fees etc are going to have to be paid by us and I think at the end of it, its going to cost a hell of a lot more to live in our own house just to have our names on the mortgage. Has anyone got any suggestions, good or bad, that might just help us out. My father in law has also said that we need to pay the capital gains up front now before we change the names over, does this sound right?? HELP!!

Cook_County

What an odd story!. It would help to know if this is subject to Scottish, or English law. Under English law you may well have a strong argument that the beneficial ownership was yours throughout but I would consult a solicitor on these issues.

cheerfulcat

browrich wrote:

My father in law has also said that we need to pay the capital gains up front now before we change the names over, does this sound right?? HELP!!

None of this sounds right. You need specialist advice.

browrich

Thanks for the advice, yes we live in England and have some written proof that the deposit made was intended for us and not my husbands mother.

regularsaver1

I'd think it would be payable now, either on a transfer of deeds or sale of property, your MIL is removing all her interest from the property

hearts

Capital Gains if any are due would not be payable until the end of the tax year.

browrich

thats what I thought, that the capital gains wouldn't need paying til the end of the tax year. Its such a miserable state of affairs, we had no idea that any of this would happen 7 years ago, we're trying to figure out who to talk to about it, financial adviser, mortgage advisor, tax specialist?? Any suggestions?

regularsaver1

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4016313

I found this.

There is info on CGT

browrich

Can the mortgage be transferred into our names or do we have to buy the house off of her and what is market value, how low could we make the valuation of our house?

regularsaver1

effectivly you would be buying the house of her, as usually with a transfer of equity with the lender, at least one mortgage holder remains on the account

you'd need to check with your solicitor in regard to this though, and mortgage lender what they are keying

silvercar

There was a similar case to this on the Sunday Times (or was it Saturday?) money problems page.

The answer was that you should make a case to the IR that the reason the house and mortgage was in MIL's name was solely to enable you to get a mortgage, that the house has been yours in all but legal title from day 1 and this was not done to avoid tax but only for mortgage purposes. your MIL therefore should not have to pay CGT as the house was only ever hers in title.