Buying brothers unmortgaged house for cash, can we swap money for title deeds or is there more to it

village_saver

Hi, we are buying my brothers unmortgaged property with cash. He has the title deeds - can we just swap them for money or do we need to use solicitors?

Thanks

Slithery

The property will need to be registered with the LR either before or at the same time as your purchase.
https://www.gov.uk/government/publications/first-registrations/practice-guide-1-first-registrations

village_saver

Thanks Slithery, it’s registered in his name so I presume I can just do a change of ownership with the L.R ? 

Do you know if there are any implications regarding stamp duty?

Slithery

If it's already registered in his name then the paper deeds are meaningless, ownership is recorded by the LR.

You need to complete forms TR1, ID1 and AP1 and return them to the LR with the relevant fee...

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/808730/TR1__2019-06-17_.doc

Guide here...

https://www.gov.uk/government/publications/registered-titles-whole-transfer-tr1/guidance-completing-form-tr1-for-the-transfer-of-registered-property

SDLT will be due at the market value of the property, not just what you will be paying your brother. This needs to be paid within 30 days.

Pixie5740

SDLT is based on the consideration (how much you pay for the property) paid. If this is an additional residential property for you the higher rate (an extra 3%) will apply. 

user1977

Slithery said:

SDLT will be due at the market value of the property, not just what you will be paying your brother.

No, it's payable on the consideration being paid, not the market value. 

Thrugelmir

Will your brother crystallise a taxable gain in disposing of the property?  

village_saver

Thanks everyone for your assistance.

Sorry not sure what ‘crystallise a taxable gain’ means.

He owns the property outright and we will be paying him cash, presumably that means he’s going to need to declare that to the inland revenue? 

GoogleMeNow

Is the property empty at the moment or does the brother currently live in it?  Does the brother own any other properties?  When you purchase the property, where will the brother live?  

user1977

village_saver said:

Sorry not sure what ‘crystallise a taxable gain’ means.

He owns the property outright and we will be paying him cash, presumably that means he’s going to need to declare that to the inland revenue? 

Unless the property's exempt from Capital Gains Tax because it's been his main residence all the time, the sale will trigger Capital Gains Tax (based on the market value).

canaldumidi

If the property is/was his main residence, there is no Capital Gains Tax for him to pay.

If not, he will have to declare and pay CGT on any gain 'crystalised' (ie increase in value between when he bought/inherited the property, and market value when he sells to you).

SDLT is payable by you on the amount you pay. If it is an additional property for you (eg 2nd or 3rd property) you will also pay the 3% additional SDLT.