Tax Implications

griff99

Hi,

I hope you will be able to help me..

I am asking this on behalf of a friend. He has a mortgage with his wife and his brother. His brother has been helping to pay the mortgage for approx 3 years. My friend now wants to take his brother of the mortgage which he has agreed to do. Is my friend and his wife liable to any tax implications. His brother doesn't want any of the money back....

Thank you in advanec for any help.

Griffo

holly_hobby

No tax on the contributions his brother has made.

Transfer of equity (removing bro), if his income formed part of the affordability assessment, will mean that your friend and his wife's income will be assessed as sufficient to continue to maintain the mge.

If the lender feels its not, they won't permit Bro to be released.

If thats the case, and depending on the income involved, they could consider a remortgage to a lender with a more generous assessment matrix, whilst at the same time effecting the TOE with Bro.

The above is made assuming that bro is not receiving any payment or consideration in exchange for the transfer of his equity to your friend & his wife - otherwise they may be exposed to Stamp Duty (SDLT), and he may be exposed to CGT (assuming he doesn't live with them inthe property as his primary residence).

Hope this helps

Holly

griff99

Hi Holly,

Thanks for responding. I will pass this information on. The mortgage lender has agreed that my friend and his wife can take over the mortgage on their own.
Once again thanks.

Griffo