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

househunt

@user1977 - Sorry I think we both posted our replies together, so I missed answering your question.  It's not that we did anything for tax avoidance originally.  The simple fact is that spouse lost job and became ill, finding it difficult to have the responsibility of a mortgage on her head, which affected her health, so naturally our son said he would be willing to take over for temporary until she got better, but now wants to hand it back.

@SDLT_Geek - The mortgage outstanding is only £30k, no cash payments were involved in original transfer.  But now that his mum is feeling better and has a lump sum payment that she has received and they are sat in the bank, she wants to take ownership back and clear off the mortgage. Sorry, but I'm not sure what you mean by “chargeable consideration”.  How do I work it out?

Hope the above clarifies our position, but if not, please let me know.  Thanks

SDLT_Geek

househunt said:

@SDLT_Geek - The mortgage outstanding is only £30k, no cash payments were involved in original transfer.  But now that his mum is feeling better and has a lump sum payment that she has received and they are sat in the bank, she wants to take ownership back and clear off the mortgage. Sorry, but I'm not sure what you mean by “chargeable consideration”.  How do I work it out?

The “chargeable consideration” is the amount on which SDLT is due.  Here it sounds like it is £30,000, which is under the thresholds for paying SDLT or submitting a return.

househunt

Thanks so much @SDLT_Geek. 

Just to be clear, if our son transferred the property back into his mum's name and whilst doing so, she fully paid off the mortgage immediately, neither our son and my wife would not need to pay any SDLT?

Also sorry if I'm getting confused, but what about other taxes such as CGT?

SDLT_Geek

househunt said:

Thanks so much @SDLT_Geek. 

Just to be clear, if our son transferred the property back into his mum's name and whilst doing so, she fully paid off the mortgage immediately, neither our son and my wife would not need to pay any SDLT?

It would have been more complicated if the transfer and transfer back (generally a bad idea) had been for tax avoidance purposes.  But this does not appear to be the case.  So no SDLT or SDLT return needed as the amount of the debt is under £40,000.

Others might help on other taxes.

user1977

househunt said:

Also sorry if I'm getting confused, but what about other taxes such as CGT?

Main residences are exempt from CGT (hence the earlier question about whether this is the home of all of the owners). No other relevant taxes.

househunt

Thank ever so much @SDLT_Geek and @user1977 - That's such brilliant news, because we were worried sick thinking we've done it all wrong and the taxman might be hitting us with some form of massive CGT tax or penalties. 

She already been through hell and back and is still currently out of work and the last thing we need is more problems.  You guys are absolute lifesavers.  I have spoken to her and she's willing to disclose that she received £70k for all her losses over 5 years.  I'll be posting a question regarding this on the 'Cutting Tax' board.

But I hope your not going to mind, but I do have one more question for you both, which is that does it matter if she uses the money she has received to clear the mortgage debt and does she need to do anything at all in advance such as contact HMRC or the bank?  

SDLT_Geek

househunt said:

I hope your not going to mind, but I do have one more question, which is that does it matter if she uses the money she has received to clear the mortgage debt and does she need to do anything at all in advance such as contact HMRC or the bank?

I can’t think of a tax problem with that.

househunt

Thanks so much!  I feel you've all been so helpful and have answered all my queries.  Not sure you'll be able to answer my next question which I'm going to post on the 'Cutting Tax' board.  But I'll put it to you anyway in case you know it.

How do I work out how much tax will be taken on a settlement?  I appreciate that it's not a simple method, but I just want to get a rough idea.  If you don't know the answer to that, then that's not a problem as I'm sure someone will have the answer to it on the other board.

SDLT_Geek

househunt said:

How do I work out how much tax will be taken on a settlement?  I appreciate that it's not a simple method, but I just want to get a rough idea.  If you don't know the answer to that, then that's not a problem as I'm sure someone will have the answer to it on the other board.

You will need to be much more specific in what you intend and also explain why you want a settlement.

househunt

SDLT_Geek said:

househunt said:

How do I work out how much tax will be taken on a settlement?  I appreciate that it's not a simple method, but I just want to get a rough idea.  If you don't know the answer to that, then that's not a problem as I'm sure someone will have the answer to it on the other board.

You will need to be much more specific in what you intend and also explain why you want a settlement.

It's not that she's asked for a settlement herself, but it's been proposed by the employer and it's what she will then use to pay off any outstanding debts.