My son got a mortgage for our family home

Jillro

12 years ago my son took out a mortgage for our family home , we were trying to get one but due to new job roles and bad credit rating we were really struggling to secure one . My son got it in his name but we have been responsible for the mortgage payments and all the utilities and building maintenance etc . The long term plan was that when my son was ready he would use the property as a deposit  for when he wanted to buy a home. This didnt really go to plan and the mortgage started to impact on him and his financial plans with his now young family , we put the house on the market and sold  . We are now concerned about how my son is able to transfer the money over to us once the house sale is finalized so that we can move on with a new home . I have read that he can’t transfer the money to us and there may be implications with tax etc , it will be around 42k , we don’t want this to impact on him and his financial situation any longer and just want to move on . At the time it felt like a great solution to secure our family home ( where my son still lived) however , I am full of quilt that we rode on his credit rating to secure the house. The house was initially my  in laws and we lived there for 3 years paying rent until one day they said we needed to move because they wanted to sell . My son is currently in full time employment with the Royal Navy but in a few months he will be leaving the Navy to start a business with his wife . Any advice ? 

pramsay13

He can transfer the money to you and there are no tax implications.

davidmcn

Jillro said:

I have read that he can’t transfer the money to us

What exactly have you read, and where?

bpj

Who was the legal owner of the house?

AdrianC

Jillro said:

12 years ago my son took out a mortgage for our family home , we were trying to get one but due to new job roles and bad credit rating we were really struggling to secure one . My son got it in his name but we have been responsible for the mortgage payments and all the utilities and building maintenance etc . The long term plan was that when my son was ready he would use the property as a deposit  for when he wanted to buy a home. This didnt really go to plan and the mortgage started to impact on him and his financial plans with his now young family , we put the house on the market and sold  . We are now concerned about how my son is able to transfer the money over to us once the house sale is finalized so that we can move on with a new home . I have read that he can’t transfer the money to us and there may be implications with tax etc , it will be around 42k , we don’t want this to impact on him and his financial situation any longer and just want to move on . At the time it felt like a great solution to secure our family home ( where my son still lived) however , I am full of quilt that we rode on his credit rating to secure the house. The house was initially my  in laws and we lived there for 3 years paying rent until one day they said we needed to move because they wanted to sell . My son is currently in full time employment with the Royal Navy but in a few months he will be leaving the Navy to start a business with his wife . Any advice ? 

Can we just clarify, please?

Prior to c.2008, you were renting the property.
It was then bought, using your son's credit rating to secure a mortgage.
So do you mean he bought it, and he is the sole owner of?
You then paid the mortgage and maintained the property.
The property is now being sold, and there will be about £42k equity after the mortgage has been cleared.

If that's right, then your son has been your landlord for the last 12 years... And depending on how much of that equity is increase in value, rather than mortgage debt reduction, he may need to pay CGT after selling. The rest of it will be deemed a gift, legally. There are unlikely to be any other implications there.

Did your son live in the property? For all or part of that 12 years?

Our of interest, how do you mean "use the property as a deposit"? Were you thinking he'd remortgage, or sell?

xylophone

Did your son live in the property? For all or part of that 12 years?

The OP stated

At the time it felt like a great solution to secure our family home ( where my son still lived) however , I am full of quilt that we rode on his credit rating to secure the house.

I wonder was the son in the Navy then (as now) and perhaps has an armed forces exemption from CGT when he  sells the property?

I say this because presumably there must be a lot of armed service personnel who  buy a home of their own but must perforce live in barracks( ?) or married quarters belonging to the MOD?

Jillro

My son was the sole owner when he bought the property , he still lived at home with us and it was is registered address , no landlord it was just his home on paper / legally . 

When we say he was going to use it has a deposit , the plan was he would change the mortgage on our house to a buy to rent then use the equity to but to a house of his choice . Plans changed and this did not happen 

frogglet

Jillro said:

My son was the sole owner when he bought the property , he still lived at home with us and it was is registered address , no landlord it was just his home on paper / legally . 

When we say he was going to use it has a deposit , the plan was he would change the mortgage on our house to a buy to rent then use the equity to but to a house of his choice . Plans changed and this did not happen 

So what has happened? 

Angela_D_3

frogglet said:

Jillro said:

My son was the sole owner when he bought the property , he still lived at home with us and it was is registered address , no landlord it was just his home on paper / legally . 

When we say he was going to use it has a deposit , the plan was he would change the mortgage on our house to a buy to rent then use the equity to but to a house of his choice . Plans changed and this did not happen 

So what has happened? 

They’ve sold it and the son needs to give them
the money 

steampowered

There are no tax implications to your son transferring the money. "Gifts" are not taxable.

As your son owned the property, he may be subject to CGT on the profit made on sale of the property, but may qualify for the armed forces exemption - I don't know the details of that exemption.

warby68

There could be benefit implications if either side have any means tested benefits.
Parents will be receiving capital and son will be giving it away.
Not clear why son bought it but the equity is going to parents who were renting both before and after (informally) - family arrangement no doubt. However from the outside looking in that is the son's equity not the parents' at the moment.