Help please - property transfer

finerj

Hi, I am looking for some help and advice, ahead of contacting a solicitor.
My husband was diagnosed with Motor Neuron disease in 2015 and sadly is approaching end of life.

Naturally we have sorted will and power of attorney etc - but I have been advise there are some changes I can make now that may help me financially in the future.

I have a flat in London, estimated value £400K with £160 outstanding on mortgage. My husband and I lived there jointly, only my name on lease though. It is my primary residence.

My husband owns a property in Scotland - estimated value £200K with £100 outstanding on mortgage. This is his primary residence.The deeds and mortgage in his name only.

At present we live mainly in the Scottish home.

I purchased my London flat in 2005 at £170,000. So, considerable capital gains to pay if I have to sell (quite likely)

I have been advised that if I transfer ownership of my London flat to my husband and then I inherit it back when he passes - I will inherit it back at current value and this will effectively cancel out the profit I have acrued so far.

Is this correct?

If so, what is the best way to transfer ownership.

What is the situation in terms of capital gains tax for transference of ownership?

I am in a position to pay off the mortgage on my London flat. I have an offset tracker with Woolwich that I can transfer. I have been very happy with this mortgage and would like to do this if possible. I guess my husbands mortgage will foreclose once he passes.

I would need this to happen quite quickly. I think it will be a matter of months, until my husband passes. He knows all about this, of course - but I want to ensure that he is not caused any stress by this and that he does not have to deal with anything.

Sorry to post so many questions in one post. Any help gratefully received!

Jacqui

Yorkshireman99

finerj wrote: »

Hi, I am looking for some help and advice, ahead of contacting a solicitor.
My husband was diagnosed with Motor Neuron disease in 2015 and sadly is approaching end of life.

Naturally we have sorted will and power of attorney etc - but I have been advise there are some changes I can make now that may help me financially in the future.

I have a flat in London, estimated value £400K with £160 outstanding on mortgage. My husband and I lived there jointly, only my name on lease though. It is my primary residence.

My husband owns a property in Scotland - estimated value £200K with £100 outstanding on mortgage. This is his primary residence.The deeds and mortgage in his name only.

At present we live mainly in the Scottish home.

I purchased my London flat in 2005 at £170,000. So, considerable capital gains to pay if I have to sell (quite likely)

I have been advised that if I transfer ownership of my London flat to my husband and then I inherit it back when he passes - I will inherit it back at current value and this will effectively cancel out the profit I have acrued so far.

Is this correct?

If so, what is the best way to transfer ownership.

What is the situation in terms of capital gains tax for transference of ownership?

I am in a position to pay off the mortgage on my London flat. I have an offset tracker with Woolwich that I can transfer. I have been very happy with this mortgage and would like to do this if possible. I guess my husbands mortgage will foreclose once he passes.

I would need this to happen quite quickly. I think it will be a matter of months, until my husband passes. He knows all about this, of course - but I want to ensure that he is not caused any stress by this and that he does not have to deal with anything.

Sorry to post so many questions in one post. Any help gratefully received!

Jacqui

There are too many variables for advice from here to be much help. The question of domicile as well as English and Scottish estates make it even more complex.. You need a specialist solicitor qualified in both English and Scots law. Arun of the mill High Street solicitor will be useless as they just don't have the expertise.

Malthusian

I have been advised that if I transfer ownership of my London flat to my husband and then I inherit it back when he passes - I will inherit it back at current value and this will effectively cancel out the profit I have acrued so far.

Is this correct?

Generally yes. But if the flat is your primary residence and has been for the period you've owned it, there's no capital gains tax to save.

finerj

Hi, Thanks for the feedback....I should have mentioned, I intend to stay in Scotland and possibly rent out the flat for a while. I may have to sell at some point as my financial future is unpredictable. When I inherit the Scottish home, it will be my primary residence.

Yorkshireman99

finerj wrote: »

Hi, Thanks for the feedback....I should have mentioned, I intend to stay in Scotland and possibly rent out the flat for a while. I may have to sell at some point as my financial future is unpredictable. When I inherit the Scottish home, it will be my primary residence.

Even more need to get professional advice. You can't just specify a primary residence as you have to actually live their to avoid CGT. The whole situation is a complex legal minefield quite apart from the emotional difficulties you are having to cope with.

getmore4less

Crunch some numbers once you establish the main residence status/time of your property and look at PRR, letting relief and the annual allowance it is very likely that your CGT exposure is not that high(and may even be Zero for quite a few years of letting).

You may be trying to solve a non problem.

There is also the issue that transferring the property will null your PRR and possibly any letting relief thus any future gains will be 100% accountable to CGT with only the annual allowance to offset.

Transferring could well make the future situation worse.

You need a much broader analysis of the situation than just this potential CGT issue in isolation.

It would appear that the more pressing issue may be funding £270k worth of debt.

How much is in the offset pot.
Is that interest only or has some extended borrowing(using the reserve) happened.
Any life cover on either of you that will help.


other issues
You won't be able to transfer the property while it has a mortgage.
You won't be able to transfer the mortgage anywhere.
Any kids, you need to consider RNRB.

there will be more to consider and the pressing timescales point at expediting this with paid advice rather than trying to research this on your own.

Keep_pedalling

Malthusian wrote: »

Generally yes. But if the flat is your primary residence and has been for the period you've owned it, there's no capital gains tax to save.

Married couples can only have one primary residence and in this case it sounds like it is the Scottish one. The default is the primary residence is the one you mainly live in unless you declare it to HMRC otherwise, but that has to be done within 2 years of marriage, assuming both properties were owned at the time, or 2 years of buying the second property if you were already married.