Mortgage issues with the future

skyela

Hello

Long story short, I separated from my ex husband in 2015. We divorced in 2017 and as I didn't earn enough at the time, my father kindly agreed to take out a mortgage with me in order to buy him out and keep the house.

My parents have their own property which was fully paid for about 15 years ago...

Even though my name was on the deeds from the very start, I had to pay the 2nd home tax ( I think it was about 4k) as although it was my one and only home, my dad's name was now on the mortgage, it is what it is.

He is on the mortgage in name but I've paid the mortgage solely.

Anyway, as this all went through in a horrible rush to sort this out and keep the house, I don't feel like I'm aware of all of the facts. Does anyone know if my dad would be liable to pay any further tax if / when he sells his own house ?

Also, at some point , when I am able to take on the mortgage on my own on paper, will there be any issues for me if I sell this ?

I'm mainly worried about my dad to be honest, as I'd pay any charges he'd incur for helping me at the time.

Thank you 🙂

ACG

If you can get dad off the Mortgage/deeds you may be able to claim back the tax bill surcharge.

Putting the property back in your name only should not incur any more stamp duty charges, it was charged because your dad owns a property already.

skyela

ACG wrote: »

If you can get dad off the Mortgage/deeds you may be able to claim back the tax bill surcharge.

Putting the property back in your name only should not incur any more stamp duty charges, it was charged because your dad owns a property already.

Thank you. Very helpful.

So if my dad sells his house in the next year or two, will he have to pay anything on his before I take him off?

I've read about capital gains tax...

amnblog

When he ‘sells his own house’, your Dad will be selling his primary private residence which means CGT is not payable.

SDLT_Geek

It might well be that the extra 3% SDLT should not have been paid and you can apply for it back now.

It comes down to establishing what is the “beneficial ownership” of your home. That is not always the same as whose name the property is in at the Land Registry. Nor is it always the same as who is liable on the mortgage. The conveyancer who acted on the transaction should be able to tell you.

Another way to think of it is what would happen if the house went up a bit in value and was sold, the mortgage being paid off. Who would be entitled to receive the remaining money? If you alone would be, then I would expect you to be the sole beneficial owner.

tlc678910

Hi,
If your dad sells his own house there is no capital gains tax to pay if since he has owned it it has always been his own main residential home. If he buys another property he would owe the additional 3% stamp duty because of his interest in your property.

If you sold your home your dad would owe capital gains tax on the increase in value from when he purchased the property to when it was sold -only for his share of the gain (normally unless you can pursue as advised by SDLT Geek above). Each year everyone has a capital gain allowance (11,700 for 2018/19) so if the gain is small there could be nothing to pay. In your situation because in reality your dad would want you to keep the money then you would want to pay his capital gain tax for him if any were due - from the gain you receive when you sell.

It would be sensible to make sure that your dad's will leaves his share of this property to you exclusively if his will generally divides his assets between siblings or leaves assets to his partner etc.
Edit: if you are joint tenants this should happen automatically.

Tlc