Confusion over removing someone from name on mortgage

wlondoner

Can he gift the flat to me?

gingercordial

wlondoner wrote: »

Can he gift the flat to me?

As I said, if you are relatives HMRC will take market value, not how much you pay or don't pay. So no, that will make no difference for his CGT liability.

Similarly, if you are removing him from the mortgage, for SDLT you are "paying" him by taking on his liability for his share therefore you pay SDLT on that amount.

It is irrelevant whether any money actually changes hands.

chalky_white_2

Your father can gift the flat to you. However, this would only apply to any equity in the Property.

You will be deemed as 'purchasing' your father's share for the half value of the outstanding mortgage (as you are taking this liability on by yourself when removing your father).

If this half value is over £40,000.00 you will need to do a Land Transfaction Return form to HMRC and depending on your circumstances you may be liable to pay SDLT (calculated on the half value). Because it is a deemed 'purchase'.

You will almost certainly require legal assistance, if only because the Nationwide will insist to make sure its security is not mucked up.

I hope that helps!

SDLT_Geek

It might help to go back to some basics here. The flat is "in the name of" OP and OP's father. Both are liable on the mortgage.


Everyone seems to assume that OP's father therefore has a share in the property, but is that right? It sounds as if OP might have put in all of the money and be making the mortgage repayments. It sounds as if OP's father might have been put onto the title and onto the mortgage so as to be liable on the mortgage and enable the borrowing to go ahead.


Perhaps there is a declaration of trust stating that OP and OP's father hold the property on trust for OP absolutely. (So that if the property had gone up in value and was sold OP would have been entitled to all of the sale proceeds once the mortgage was repaid and costs of sale paid.)


If so many of the SDLT and cgt problems discussed fall away. These taxes look to the underlying beneficial ownership, not who is the registered proprietor.

steampowered

I imagine you would need to use the same solicitor to do the land transfer as you use for the remortgage.

In the same way that the solicitor would handle both the mortgage and the transfer of ownership when you buy a property.

The lender may have some special requirements. Perhaps the lender will want your father to sign a document confirming that he has no interest in the property?

These are questions you need to ask the solicitor really.

wlondoner

Thanks. I'm not remortgaging though that's the "easy" bit I'm not worried about that as Nationwide charge £125 to remove a name (if you pass affordability)

SDLT geek - how does a declaration of trust work?
Yes that's right he has never paid on the mortgage which has just over £100k left on it

wlondoner

I don't think you can add a declaration of trust 4 years after moving in?

SDLT_Geek

A declaration of trust is usually made at the time of a purchase in a case where there are joint buyers or the persons who are to be registered proprietors are not the same as the beneficial owners.

A simple one can be in the transfer (often a TR1) or in a more complex case in a freestanding deed.

Did your father put in any capital at the time of the purchase?

Was your father expecting to acquire a share in the property when it was bought?

wlondoner

Thanks for reply

He didn't put cash into it, he isn't expecting a share or any money from it.

SDLT_Geek

So hopefully you will find a declaration of trust confirming the position, that the two you hold the property on trust for just you absolutely.