Purchasing House for Mum and Tax Implications

Jack789

Hello, I am looking for some advice in regards to purchasing a property on behalf of my Mum and for her benefit. She is in the process of selling her house and will walk away with about £75,000 equity however due to her age and credit she cannot get a mortgage.!
My thoughts were that I would purchase a property by way of a Buy to Let mortgage for my Mum to live in (I have spoken to a Mortgage Lender who has confirmed that there are a couple of lenders that allow you to let to family members as I do appreciate that not a lot of lenders allow this).!
The plan is that my Mum will pay the mortgage and we enter into a Declaration of Trust confirming that I hold the beneficial interest of 100% for her. Essentially the house will be my Mum’s, the deposit funded by her, any additional equity in the property would be hers and maintenance would be done by her. Does anybody see implications with this? Will this be classed as income on my part by HMRC as I legally own the property? Will it be subject to CGT? Any advice/help would be greatly appreciated. Many thanks

G_M

Jack789 wrote: »

.....
......Essentially the house will be my Mum’s, ...... Does anybody see implications with this? Will this be classed as income on my part by HMRC as I legally own the property? Will it be subject to CGT? Any advice/help would be greatly appreciated. Many thanks

In your mind, it's hers.

In law, it's yours.

Yes, CGT liability when you sell.
Yes, her payment of your mortgage represents income for you.
Yes you'll be a landlord with all the associated responsibilities.

* New landlords: advice, information & links

Oh and finally, her cash will be tied in with your property. this may not be a problem, though several potential scenarios exist eg

* you get divorced. Your ex claims half the value of the property
* you go bankrupt and the OR takes the property
etc

Jack789

Thank you for the quick response. Would the Declaration of Trust not confirm that the property does infact belong to her, as intended? From what I have read that was my understanding but I could be totally wrong!!

G_M

Speak to a solicitor, or accountant, but I seriously doubt it. Ownership is determined by the name on the Title lodged electronically at the Land Registry.

I guess it is posible HMRC have rules relating to how they treat such a Declaration. That's really straying into the area of tax advice rather than property.....

edit: OK, a quick google of "hmrc declaration of trust property" found

http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM9520.htm

http://www.taxguide.co.uk/content/declaring-interests-joint-property

http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM9150.htm

My understanding was that declaration could specify the % ownership where Title is shared, but maybe you can declare that someone un-named on the Tite is the beneficial owner.Read and enjoy!

Jack789

Thank you!