HELP PLS - Temporary transfer of ownership / mortgage - Tax questions

househunt

Hello everyone,

I'm desperately hoping someone can guide me as I think we've messed up big-time (or maybe not?).  Myself and my partner have owned a property a considerable number of years and there is a small mortgage outstanding.  A few years ago, she started having lots problems at work and lost her job (I'm not allowed to go into details - Sorry!). 

Her mental health severely deteriorated and she became extremely unwell to the point that she couldn't manage a lot of daily activities.  She said she couldn't handle having a mortgage on her head.  As a resolution one of our children said they would be willing to temporarily take responsibility of the mortgage if it helped.

So with all of us in agreement, we then began a process of temporary transfer of ownership and a new mortgage application as the existing one was due to run out anyway and we were looking for a better rate.   Since most of the house had already been paid off, only a small mortgage was needed.  I kept ownership of vast majority of equity and a small amount of equity was for our child as the idea was once my spouse was better, she could take it back.  There was no money involved as this wasn't really a purchase as such, nor was it a gift to anyone. 

As time has gone on, with therapy she's now feeling a bit better. She has received compensation (which I'm not allowed to discuss - Sorry!).  So our plan is now to use that money to clear the mortgage and the transfer the equity back to my partner. 

But we have been made aware that doing so can mean that we would be liable to taxes such as CGT or SDLT and others.

What do we do? Are we liable to pay tax, even though no money has been involved?

Thanks in advance for any assistance !!

user1977

What do you mean by you "have been made aware"?

Who lives in the property?

househunt

Hi user1977.  Thanks for your help.

Just me, my partner and our kids.  Sorry, I should have been more clear - It's actually a friend who mentioned it that we may owe tax if the property ownership was transferred back to my partner from our child, which has obviously got me worried.

Caz3121

Was the child who is on the mortgage living in the property or elsewhere?

househunt

@Caz3121 - Thanks for your help.

The child who is on the joint mortgage has been living with us and this has not changed in any way at all.  There is no other property.  But does this make any difference? If so, what?

amigo123

I'm also interested in this question, i.e if property ownership is temporarily transferred to a family member without and then back, is there any sort of tax to pay? 

theartfullodger

Sorry to read, sounds tough.

A child on mortgage?  Really?

How old is this child?  Are they also on land registry records?

user1977

theartfullodger said:

A child on mortgage?  Really?

How old is this child?

I presume that's "child" as in "immediate descendant", not "minor"...

user1977

amigo123 said:

I'm also interested in this question, i.e if property ownership is temporarily transferred to a family member without and then back, is there any sort of tax to pay? 

It depends what you mean by "temporary", but there's no particular concession for it being short term - and if you're actually doing it as an attempt at tax avoidance (e.g. so that somebody isn't deemed to be an owner for stamp duty purposes in relation to another transaction) it might be completely disregarded.

househunt

@amigo123 - Are you in the same situation too?

@theartfullodger - Thanks for your empathy.  Sorry, when I meant a child, I meant our child.  He's actually 25 years old.  I assume since we've gone through a re-mortgage than yes he will be on the land registry too.  I'm hoping someone can explain the tax situation if there is any as such.

Thanks for your help again.

SDLT_Geek

Whether there is stamp duty land tax to pay depends on the amount of the mortgage debt involved.  

Although no direct cash payments were made, the debts involved can count as “chargeable consideration”.