Complex problem with house ownership

mushymatt

Hi all,

Got myself into an interesting pickle and am looking for some advice..

4ish years ago I lent my sister £45k so she could buy her counsel flat (£75k). With my money she bought the place outright, with no mortgage.

This was done as a kinda loan - but at the same time me and my sister have a unwritten agreement that I unofficially own 2/3 of the property, even though my name is not on any deeds.

In the last couple of years my sister got married and bought another house. And her (well our) flat went on the marker to rent.

In that time Id estimate its generated about £4-5k of revenue - which is all mostly still sitting in the bank.

This unfortunately has had something of a negative effect on my sisters benefits - she is means tested for some and has lost a lot of them due to the fact she has earnt (on paper at least) an additional £4k this year.

But here's the problem - she has not really earn't that, as 2/3 of is (unofficially) mine.

Now my sister has a couple of kids, works in a pretty low paid job and this little hiccup is likely to affect her one way or the other for years or for as long as her name is the only name on the deeds.

Now....Can anyone tell me if Its possible to sign over 2/3 of the property too me? And if so what kind of cost and tax ramifications might I likely expect. Is it even legal?!

The alternative option is we simply sell the flat, and my sister refunds me the cash. But we would like to keep the flat as an ongoing investment if possible.

If anyone has any advice or thoughts Id love to hear it.

cheers!

FBaby

DPW doesn't do 'unofficial'! Otherwise, we would all be 'unofficially' earning less income. If she sell the flat, she will liable for tax as that would be her second property. I think the same would apply if she signs any percentage of it over to you.

Pixie5740

Your sister can't have it all ways, taking advantage of the whopping big RTB discount but wanting to also benefits whilst this asset is generating an income for her.

You're not named on the deeds so it doesn't really matter what kind of unofficial agreement you have with your sister. You've both tried to benefit from the RTB scheme and it's come back to bite your sister royally on the backside. She cannot simply decide to split the rental income with you. Yes she can give you some money after declaring it for tax and benefit purposes but she can't just give you money as a way of reducing her income.

Yes she could sell the property and give you some of the proceeds but since you never had anything about the loan put in writing and she has made no loan repayments she'd have a difficult time proving this wouldn't be a deliberate attempt to deprive herself of assets in order to claim benefits.

marksoton

Why didn't you go on the deeds originally?

Bluebirdman_of_Alcathays

Let me guess - as it's all "unofficial" you haven't been declaring the 2/3ds rental income to HMRC. I think you need proper paid for legal advice - things could get even more messy.

Pixie5740

marksoton wrote: »

Why didn't you go on the deeds originally?

I think we both know the answer to that. Although it would have been useful if the OP had put a second charge on the property (council would have the first) the same as a mortgage lender would have at the time to demonstrate this was a loan and not a gift. However, that wouldn't help if the point of giving the sister the money wasn't just to assist the sister in buying a home but to also benefit from any rise in value.

mushymatt

Pixie5740 wrote: »

You've both tried to benefit from the RTB scheme and it's come back to bite your sister royally on the backside

Its not really like that - but appreciate thats how it looks.

Originally it was to help her to live in a house she had lived in for 12 years. She needed money and I gave it too her.

Now obviously Im 45K out of pocket, and shes getting penalized for the fact I helped her out. I get that this is totally our faults, but it was never a case of cheating the system or anything like that. At the time I/we had no idea she would get married, buy another house etc.

Selling it might be the best option, she/we can collectively bite the tax bullet and see whats left.

mushymatt

marksoton wrote: »

Why didn't you go on the deeds originally?

Was not allowed as it was her counsel flat.

mushymatt

Bluebirdman_of_Alcathays wrote: »

Let me guess - as it's all "unofficial" you haven't been declaring the 2/3ds rental income to HMRC. I think you proper paid for legal advice - things could get even more messy.

I have received no money from rental, and my sister has declared everything.

Okydoky25

£5k for 2 years rent doesn't seem worth keeping it anyway unless those figure are incorrect?

marksoton

Pixie5740 wrote: »

I think we both know the answer to that. Although it would have been useful if the OP had put a second charge on the property (council would have the first) the same as a mortgage lender would have at the time to demonstrate this was a loan and not a gift. However, that wouldn't help if the point of giving the sister the money wasn't just to assist the sister in buying a home but to also benefit from any rise in value.

Oh i know. I was simply illiciting the answer...:D