Mortgage in my name but ownership in Mum's name?

yorkshirebirdie

hello,

my Mum and I are thinking of investing in a flat to rent out. She is retired and no longer works so cannot get a mortgage, I would full time and we have a healthy deposit.

We would like to get the mortgage in my name but Mum on the title deeds/owning the property. Has anyone does this? Is it possible to spilt mortgage and ownership?

The reason behind this is the profit from the rent will be around £7k p/year and so comes in under the Personal Allowance of £9,440, as Mum doesn't earn it means she could have the profit form the property without paying rent.

hoping someone might have some advice:)

somethingcorporate

No, I don't think the mortgage company would allow this as they would not have any security if someone else owned the property that the mortgage was secured on.

ViolaLass

You can't be party to a mortgage if you don't own a property.

chanz4

isn't this called tax evasion

Senior_Paper_Monitor

Joint mortgage - joint ownership as 'tenants in common' with you owning 1% and 99% by mother.

Job done - total legal and ethical in my view.



There are a still a small number of lenders who allow two on mortgage and one on deeds in specific circumstances, may or may not be available in your case (considerably more detail needed to assess that)

witchy1066

I know nothing about the mortgage side of things so will leave that to those who do
but I feel I need to point out that your mums pensions and any benefits she may be in receipt of will be taken into consideration when working out her personal allowance for tax , so depending on her situation she could end up being worse off ,

pensions, interest from savings , earned or unearned income all count towards your tax allowance

Senior_Paper_Monitor

The point made by witchy is valid (except wouldn't normally affect pensions) and should be taken into account by any decent broker looking at structuring the share etc.

witchy1066

Senior_Paper_Monitor wrote: »

The point made by witchy is valid (except wouldn't normally affect pensions) and should be taken into account by any decent broker looking at structuring the share etc.

yes I believe that is correct pensions will not be effected but the amount of pension will be taken for tax calculation,

the only reason I know this is because I have a small (tiny) share in my brothers business that and a private plus state pension and I had to pay tax last year when all were calculated it wasn't much and I didn't mind

but

if the OP mum is in receipt of pension credits that will be affected

as Senior Paper Monitor says a good broker is the best way forward

holly_hobby

Apart from this affecting any means tested benefits Mum (and you of course) apply for (inc any long term care), you will both also need to report your receipt of rental income via annual self assessment (even if along with ALL other taxable income received from ALL sources, there is still nil tax due).


If you do elect to effect this under a TIC arrangement (which HMRC regs state isn't necessary in the case of non-married/civil partnerships, in order to record and declare unequal Beneficial Ownership & profit/loss division of gain/income to HMRC - http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm ), you do need to be aware that there is no automatic transfer of ownership on 1st death (as with joint tenancy arrangements), so please do ensure that you both update your wills accordingly.

As depending upon how you want the property ownership to be handled on death, holding under a Joint Tenancy agreement may be more appropriate for you. Your qualified tax adviser will assist with further guidance appropraite to your circs, and set up the appropriate deeds declaring the weighted Ben Ownership, which should be backed up by the same proportions actually being paid into each of your bank accounts (for any later HMRC inspection of the arrangement).

And of course upon later selling the property, you will both be exposed to CGT on your share of gain under beneficial ownership ( net of permitted deductions/exepmtions) gain - to which personal allowances can not be applied. So if you actually hold under Joint Tenancy, you will be able to simply revise the trust deed (denoting the weighted division of rental income and beneficial ownership), onto a much more equal footing (ie standard 50/50), in order that you may both fully utilise and apply your unused annual CGT exemption (currently £10,900 pp 2013/14), to any exposed gain.

You may also wish to consider that Mum (even with no income) will be jointly and severally liable with you, for servicing the mge (ie in the absence of tenants etc) - so you need to ensure you have sufficient contingency plans and funding in place for such an event, along with doing your homework to ensure that they'll be sufficient yield to make it all worthwhile given the issues briefly discussed.

A decent mge broker/IFA and/or tax practitioner (whom can examine and advise on the more complex financial arrangements), and your solicitor will be able to sort this between them.

Hope this helps ... hope all goes well

Holly xx

kingstreet

ViolaLass wrote: »

You can't be party to a mortgage if you don't own a property.

Not the case.

There are lenders who will allow more borrowers than there are owners, but not the other way round.

ViolaLass

kingstreet wrote: »

Not the case.

There are lenders who will allow more borrowers than there are owners, but not the other way round.

Sorry, perhaps I should have said "sole party". That would then be true, wouldn't it?