Worried about CGT on property mother signed over to me 18 years ago

Local_Lass

I’ve given you all the information I have, and answered as many questions as I could, I just wanted a little guidance as I know nothing at all about anything like this.  I was not given any paperwork, not a damn thing, nor has anybody ever clarified any information regarding any of this with me.  I had no idea about CGT until my partner and I were buying this house and the solicitor mentioned it when she told me about the extra LBTT, which in itself was a shock.  All I’ve been able to ascertain is that the house deeds are in my name, nothing else.  I can’t get any information from my mother, she just turns it into a huge, painful argument and I suspect it’s partly because she doesn’t actually understand any of it herself, and with COVID happening I’m not particularly keen to be trying to tackle this with my solicitor at the moment just to try and see what she can find out, I guess I’m going to get stuck with a big bill for sorting that out later down the road but for now it’d just be wasting money I don’t really have with no benefit other than a little more info but nothing resolved.  I guess I’ll just have to put up with not being able to plan ahead and deal with everything as and when the need arises.  

To those who have been so helpful, I am very grateful for your assistance, it is very much appreciated, and to those who’ve made me feel a bit stupid, please remember that the reason someone tends to ask for help to understand even a broad concept is because they genuinely don’t know and are doing the best they can with the information they have.

Keep_pedalling

Local_Lass said:

I’ve given you all the information I have, and answered as many questions as I could, I just wanted a little guidance as I know nothing at all about anything like this.  I was not given any paperwork, not a damn thing, nor has anybody ever clarified any information regarding any of this with me.  I had no idea about CGT until my partner and I were buying this house and the solicitor mentioned it when she told me about the extra LBTT, which in itself was a shock.  All I’ve been able to ascertain is that the house deeds are in my name, nothing else.  I can’t get any information from my mother, she just turns it into a huge, painful argument and I suspect it’s partly because she doesn’t actually understand any of it herself, and with COVID happening I’m not particularly keen to be trying to tackle this with my solicitor at the moment just to try and see what she can find out, I guess I’m going to get stuck with a big bill for sorting that out later down the road but for now it’d just be wasting money I don’t really have with no benefit other than a little more info but nothing resolved.  I guess I’ll just have to put up with not being able to plan ahead and deal with everything as and when the need arises.  

To those who have been so helpful, I am very grateful for your assistance, it is very much appreciated, and to those who’ve made me feel a bit stupid, please remember that the reason someone tends to ask for help to understand even a broad concept is because they genuinely don’t know and are doing the best they can with the information they have.

As there is nothing you can do about the situation, I think you somehow have to put this out of your mind until for whatever reason your mother no longer occupies the house. This could easily be a decade away or more, which is a long time to fret about something you have no control over. 

xylophone

Your parents bought the property under the right to buy scheme.

It seems likely that they were "joint owners with a survivorship clause".

See
 https://www.which.co.uk/money/mortgages-and-property/first-time-buyers/buying-a-home/joint-tenants-vs-tenants-in-common-amlkh0x4ct97 - Which?

It seems that after your father died, your mother  caused the property  to be transferred into your sole name.
However she retained the right to live in the property either  formally by means of some sort of  Deed or de facto by simply not budging. 

Ether way, this does not change the fact that she made you a gift of the property and that you own it and have owned it since it was gifted to you.

Because the gift was with reservation of benefit, it has not fallen out of your mother's estate for purposes of calculation of IHT (but it appears that the value of the property is low enough to fit within her Nil Rate Band).

If you seek to sell the property when your mother dies, (or you seek to  gift the property to your daughter), you will need to establish the  difference between the value of the property at the time it was gifted to you and the value at the time of sale (or gift to your daughter).

That difference is your gain for CGT purposes.

DoctorStrange

Is it possible to sell the house now to the daughter, and gain a refund on the ADS which could be used to offset some of the CGT?

Given the purchase would incude a non-paying tennant with a lifetime right of residence,  the purchase price would be below market value which could also help reduce any CGT on the OP's part (albeit at the risk of transferring the liability to the daughter)


Apologies if this isn't possible - just throwing an idea out 

kazwookie

1. Can you contact the solicitor from years ago and ask for a copy of the paperwork regarding the transfer of the house to your name? and for a copy of your father's WILL

2. Look to see if the house is on land register  ~  https://www.ros.gov.uk/

3. Look to see if your father's WILL is registered, and get a copy (it may help / or not)  https://www.scotcourts.gov.uk/taking-action/dealing-with-a-deceased's-estate-in-scotland

Is there anything at all in writing about your child receiving the house in future years?  If not as you own the house, it will be up to you what happens, I would suggest selling it, as it seems to be in totally the wrong place for the life you and your family lead.

If you keep the house, make sure you have an up to date WILL regarding this property.

If in time you rent it out, make sure you know about Scottish law regarding renting out.

Have a look on rightmoves or similar for the possible current value

Sounds like a real mess in the making.

getmore4less

DoctorStrange said:

Is it possible to sell the house now to the daughter, and gain a refund on the ADS which could be used to offset some of the CGT?

Given the purchase would incude a non-paying tennant with a lifetime right of residence,  the purchase price would be below market value which could also help reduce any CGT on the OP's part (albeit at the risk of transferring the liability to the daughter)


Apologies if this isn't possible - just throwing an idea out 

Not clear that really exists other than by I am giving you the house and you can't kick me out. If it was a proper forma agreement then that would in many cases be a trust that would change the LLBT and CGT situation. Still not clear what the fathers will said as that could also change the situation re CGT.

DoctorStrange

getmore4less said:

DoctorStrange said:

Is it possible to sell the house now to the daughter, and gain a refund on the ADS which could be used to offset some of the CGT?

Given the purchase would incude a non-paying tennant with a lifetime right of residence,  the purchase price would be below market value which could also help reduce any CGT on the OP's part (albeit at the risk of transferring the liability to the daughter)


Apologies if this isn't possible - just throwing an idea out 

Not clear that really exists other than by I am giving you the house and you can't kick me out. If it was a proper forma agreement then that would in many cases be a trust that would change the LLBT and CGT situation. Still not clear what the fathers will said as that could also change the situation re CGT.

I'm not 100% on this myself,  but I was thinking that if companies can buy houses this way (e.g. equity release / lifetime mortgages) why can't individuals?

The mother (house owner) has paid ADS on her primary (and arguably only) home so selling the house would make sense to recover that. The daughter (granddaughter) would have obviously to purchase the property but for a price comparable to that offered by a lifetime mortgage/equity release company rather than full market value. This would hopefully reduce any CGT on the OPs part and get the house (and future CGT issues) to the correct owner.

Like I say,  just a thought and might not be viable but the OP was looking for ideas 😁

Keep_pedalling

DoctorStrange said:

getmore4less said:

DoctorStrange said:

Is it possible to sell the house now to the daughter, and gain a refund on the ADS which could be used to offset some of the CGT?

Given the purchase would incude a non-paying tennant with a lifetime right of residence,  the purchase price would be below market value which could also help reduce any CGT on the OP's part (albeit at the risk of transferring the liability to the daughter)


Apologies if this isn't possible - just throwing an idea out 

Not clear that really exists other than by I am giving you the house and you can't kick me out. If it was a proper forma agreement then that would in many cases be a trust that would change the LLBT and CGT situation. Still not clear what the fathers will said as that could also change the situation re CGT.

I'm not 100% on this myself,  but I was thinking that if companies can buy houses this way (e.g. equity release / lifetime mortgages) why can't individuals?

The mother (house owner) has paid ADS on her primary (and arguably only) home so selling the house would make sense to recover that. The daughter (granddaughter) would have obviously to purchase the property but for a price comparable to that offered by a lifetime mortgage/equity release company rather than full market value. This would hopefully reduce any CGT on the OPs part and get the house (and future CGT issues) to the correct owner.

Like I say,  just a thought and might not be viable but the OP was looking for ideas 😁

Selling to a connected person at a discount does not reduce CGT, the discount counts as a gift, and CGT will still be based of market value. 

sheramber

Then the daughter will be liable for CGT when she sells it so another lot of CGT.
it would also  disqualify her from any fist time buyer discounts.
I don't think the OP wants to hand the house onto her daughter. She wants her to have the money.
 

brianposter

As it is an ex-council house you can probably work out the value when it was put into your name simply by looking up the prices for which similar houses sold at that time. I used Rightmove to do this.

When the time comes you can use this value on the CGT return.