CGT and PPR on joint tenancy

Swarbs

Hi

I'm a bit new to this but here goes...

I'm about to by a flat, with my dad acting as guarantor. However, my mortgage broker has just informed me that it will be around £100 a month cheaper if we buy the flat jointly. So I'm thinking of buying it jointly, and transferring it into my name at the point of remortgage once I have the salary/affordability to own it outright.

The main problem I've found is that, as it's not his main home so CGT will be due on any gain in value from his half. I'm buying a £300k flat in London and it will be at least a couple of years till we remortgage, so we could be looking at a five figure CGT bill when we come to transfer. Ouch.

I'm wondering if we can avoid this by using the PPR exemption, but was hoping for some advice/experience on how cheeky we can be with this. Basically, if my parents come and stay with me for a weekend or two, is that enough to nominate it as their PPR for a week? That way we avoid three years CGT on dad's half of this flat, and they only lose one week from their house.

Does anyone have any advice? Is this likely to wind up with me in the dock?!? Are there any other ways we can potentially avoid this?

Thanks all in advance

Swarbs

mightymouse

Hi

Why is it say £100 cheaper to have your dad on the mortgage rather than as guarantor, his liability for repayment is there just the same if you fail?

If the PPR extension works in relation to your circumstances and is within guidelines then it is there to be used.


Scroll down a bit on the link and see if the criteria fits.

(right click to open new window)

http://www.playthesystem.co.uk/property.aspx

Swarbs

Thanks for the link, although it says a 'couple of weeks', I'm not sure if that'll be the same as a couple of weekends! Do my dad need to have post going to that address or register with the local authority?

It's £100 a month cheaper becuase the joint ownership deal is with a different lender on a better rate. Having my dad as guarantor restricts the number of lenders we can use.

One other option is to have him take a token (1%) share in the flat as tenants in common. This way his share would be only £3,000, so would be unlikely to grow by more than £8,800 for the next couple of decades. Does anyone know if this is an acceptable split for mortgage lenders etc?

Cheers

Swarbs

mightymouse

hi

From memory re the joint purchase -the mortgage deed would require joint and several liability but ownership could be split in any proportion (as relates to equity)

If you talk to someone who will give you a definitive answer as this is only a guide.

1. an independent mortgage broker or second opinion if needed

2. your solicitor re joint and several and %

3. I am not sure you are interpreting the link properly so at this point if you intend to look down that route talk to an I.F.A and also arrange your mortgage there.

cheers