Giving my property to my daughter

Blaise_in_Surrey

Apologies if this has been previously covered (I'm a new member) but a search did not bring up my exact situation, and neither does a search engine.

I own a flat that I bought six years ago for my daughter to live in. It is worth around 250,000. There is a small 'interest-only' mortgage, of 62,000, in my name only. My daughter does not pay rent. At the time of purchase my daughter was a student, but she now earns more than me(!), so I want to transfer the flat (title deeds I suppose this means) and the mortgage into her name. I have spoken to Barclays (the current mortgager) who tell me that it is possible, but for vast sums of money, and to Nationwide (with whom my daughter and I - individually - have current and savings accounts), who tell me that the only way to do as I wish is to sell the flat to my daughter.

Please, give me the benefit of your wisdom/experience as to the best way forward. Would putting the flat and mortgage into joint names (if that's possible) give my daughter the same security as owning it outright?

Thanks in advance.

silvercar

Joint names by transfer of equity, followed by a further transfer of equity into your daughters sole name at a later stage.

Your lender shouldn't have a major problem with the first stage as their would them have 2 people to chase for the mortgage not 1. For the second stage, she would need to be able to show she can afford the repayments on her own.

You may have a CGT liability, but could claim that it was registered only in your name to obtain the mortgage and she always held the beneficial ownership.

If this won't wash then transfering in stages, gives you 2 lots of CGT allowance in different years assuming that there is a gain to be taxed.

amnblog

You cannot transfer the mortgage into your daughter's name, if you were given that impression it is wrong.

You could sell to your daughter at a price sufficient to repay your mortgage. She could arrange her own mortgage to provide these funds.

There will be a number of legal and taxation issues to be considered.

Consult a mortgage broker.

Blaise_in_Surrey

Thanks for the replies so far, which seem to take a different approach..... Any further thoughts please?

silvercar

I think amnblog and I were much in agreement, you can do the transfer, you would need the lender's agreement.

Tax implications are the possibility of CGT if the property has gained in value. There is also inheritance tax implications, possibly.

There are implications for care costs if you are elderly/ potentially in need of residential care.

So I would say that it is possible, just a number of hoops to jump through. First thing is whether your daughter can get a mortgage in her own name, either with your current lender or someone else.

If that is not possible, the next thing to try would be to see if the lender will agree to transfer to a joint mortgage.

phillw

Blaise_in_Surrey wrote: »

I own a flat that I bought six years ago for my daughter to live in. It is worth around 250,000. There is a small 'interest-only' mortgage, of 62,000, in my name only.

If you really do gift the property to her with no conditions that could be construed as a sale, then the stamp duty would be calculated on the value of the outstanding mortgage. If she owns no other property then 62k would put you in the 0% band.

She just needs to apply for a 62k mortgage on the property, to pay off the existing mortgage. I don't know if you'll need two conveyancers or whether one can act for you both.

getmore4less

CGT could well be the main immediate issue.
What did you pay for it?

The simple approach is sell for the outstanding mortgage(if you can pay that off yourself), gift the rest.
she raises the mortgage to buy the place.

You could reduce the gift element by her raising more funds, might be handy if you have a mortgage on your own place you would like to reduce, or you could have uses for the cash like gift to other kids.

IHT is not really an issue at this level as gifting does not make the situation worse the gift just drops off your estate after 7 years, if you have more gifting going on then that will need looking at if it goes over the nil rate band as that has implications.

you also need to consider what would happen if your daughter were to die, and what happens to her assets a bit of multi generation IHT planning.