Second Property - SDLT return

sb53812

Hi all,

I have found myself in a tricky situation and would be grateful for advice.

My partner and I are purchasing our first property together through a shared ownership scheme. She has never owned before and until recently I believed I had never owned before.

When my late great grandfather passed away last year, he left his house to my mother. My mother has now told me that the property she inherited is in fact in my name. She transferred it in to my name (directly from my great grandfathers estate) for tax reasons without telling me. I recall signing the documents but thought I was witnessing a document at the time.

My partner and I are due to exchange shortly on our shared ownership property and have just completed an SDLT return for our solicitor.

I am now worried that the second property is going to come to light (as HMRC will surely raise this because of the SDLT return). At present I have stated I do not own another property.

I am therefore wondering what action I should take. I am not concerned about paying an additional 3% stamp duty if that is necessary, but I am more worried about losing entitlement to purchase our new property - because shared ownership is only available to first time buyers,

Should I:
1. Appoint a solicitor to seek to revert the transfer of my great grandfathers property in to my name, and have this corrected to my mothers name. I have seen a copy of the will which definitely leaves the property to my mother, and not me.

2. Appoint a solicitor to transfer my great grandfathers property to my mother. This seems easier but I am wondering if this will trigger a tax liability?

3. Do nothing and hope the second property doesn't come up.

Thanks for all thoughts and advice.

Pixie5740

Get a copy of the title deeds from the Land Registry (cost about £3) to find out if you really do own the property.

Who is living in the property just now? If it really is yours could you sell it?

1) You could appointment a solicitor or you could DIY it. Does your mother want the property in her name?

2) Not sure how this is different to 1. You could get hit with a CGT bill.

3) Don't do nothing. If HMRC find out they won't just hit you with the additional 3% there will be penalties.

davidmcn

You can't unilaterally transfer property to somebody else (admittedly that seems to be what your mother did to you, but it shouldn't happen!). Does your mother want the property back?

sb53812

I have checked the deeds and the property is definitely in my name. My mother is generally willing to do whatever is necessary/appropriate to help correct the issue she's created. She is happy to have it transferred back to her if necessary.

My main concern is not paying the additional tax, I am quite happy to do that. My main concern is if the second property comes to light before we complete the purchase, the housing association will pull out as we will not technically be entitled to the property.

I am considering doing nothing for now and then writing to HMRC after our purchase has completed, explaining the situation and confirming that I now need to pay the increased tax. I am just wondering if the SDLT return process is likely to immediately point out to my solicitor that I own a second property, and hence they will be obliged to inform the lender and housing association.

Ozzuk

The house is in your name but who actually owns it? I.e., did your mother intend to retain 100% of the property? If so, I'd transfer it back asap hitting her with any of the tax issues (I'm wondering if this is tax evasion and not just avoidance, she could be in a fair bit of trouble).

If she intends any part of the house to be actually yours then it becomes even more complicated as you may not be a first time buyer, therefore losing the entitlement - quite rightly as you don't need help to buy if you already have a property interest.

The SDLT is yet another angle, but I'd be sorting ownership of the property fix and almost certainly getting legal advice as it sounds like a nightmare situation.

Just to add - who lives in the house? Are they paying rent? If so likely your mother isn't declaring that either given her current performance!

martindow

I think you need to step back and think about your options. You are in the happy position of finding you own a house. Do you really want the complication of shared ownership when you can probably buy a house outright. To be blunt, should you be taking a HA house in your situation? I doesn't seem morally right to me.

You haven't answered the question regarding who lives in the house that was given to you - not your mother?!

sb53812

Thanks all. My mother effectively owns and controls all aspects to do with that house and I do not believe she wants to sell it. It is empty at the moment and she has plans to decorate it in the near future. In short I have nothing to do with it really.

If I do nothing, does anyone know if the second property will come to light a) when my solicitor completes/files the SDLT return, or b) if it will come to light after we have completed? I am considering doing nothing and then writing to HMRC after to completion to inform them of the situation and that I need to pay the additional tax. In this way, it would avoid the housing association being aware of the second property and pulling out. Thanks

Bluebirdman_of_Alcathays

sb53812 wrote: »

Thanks all. My mother effectively owns and controls all aspects to do with that house and I do not believe she wants to sell it. It is empty at the moment and she has plans to decorate it in the near future. In short I have nothing to do with it really.

If I do nothing, does anyone know if the second property will come to light a) when my solicitor completes/files the SDLT return, or b) if it will come to light after we have completed? I am considering doing nothing and then writing to HMRC after to completion to inform them of the situation and that I need to pay the additional tax. In this way, it would avoid the housing association being aware of the second property and pulling out. Thanks

1 - you own it - you can sell it. Those are the bare facts. You need to accept this.


2 - you are essentially asking "will I get caught". The answer is possibly not. People commit tax fraud every day of the week and don't get caught. Admitting after the event will raise plenty of eyebrows - I would expect you to get at the very least a hefty fine. You are also defrauding the housing association. Will they find out? Again, who knows.


In your shoes I would sell the other property, and use the cash to fund a non HA home. It is, surely, the best option.

Pixie5740

No you own the house. If your mother wanted to retain control of it then she should never have put it in your name. To what end does she want to decorate the house? To live in herself, to let the property out?

So your current plan is to lie to your solicitor, the HA and HMRC and then send a letter to HMRC explaining the situation. In the words of Tony Stark, "not a great plan."

sb53812

Pixie5740 wrote: »

No you own the house. If your mother wanted to retain control of it then she should never have put it in your name. To what end does she want to decorate the house? To live in herself, to let the property out?

So your current plan is to lie to your solicitor, the HA and HMRC and then send a letter to HMRC explaining the situation. In the words of Tony Stark, "not a great plan."

Yes I know I technically own the house but both my mother and I consider it hers for all intents and purposes. I would never want to force the sale of it and create family turmoil.

In terms of telling HMRC after I have completed, this is exactly what I would have done if my mother hadn't told me what she'd done until later down the line. It is a question of tactically delaying my disclosure in order to be able to complete the purchase. I appreciate this is not the best thing to do morally/legally but I am trying to continue purchasing my first property and circumnavigate the mess my mother has created as best as I can.

If I go with the other option and transfer the property to my mother, does anyone know what tax liability I would be required to pay? Thanks

Pixie5740

You don't technically own another house you actually do, in the eyes of the law, own another house. It doesn't matter what you and your mother consider the situation to be the law sees it differently. Since you own it you wouldn't be forcing a sale as there would be no one who could legally stop you from selling because you legally (not technically) own it.

It's not a question of tactically delaying disclosure it's a case of out and out lying to your solicitor, the HA and HMRC. In other words fraudulently purchasing a shared-ownership property you are not entitled to and committing tax evasion. Have you considered a career a spin doctor?

You haven't provided anywhere near enough information for anyone to know whether you would be liable for CGT should you transfer the property back to your mother. Have a look at Capital Gains Tax on HMRC's website.