Gift of Deed question

fluffy_kittens2024

Long story short, I own a flat worth around £550,000, with about £96k left on the mortgage. My sister would like to move in there and "pay me out" with her share from our deceased parents estate - not for the full amount that it's worth, but for perhaps half. 

My question is, if I take care of the outstanding mortgage, I can transfer ownership of the flat to her via a TRANSFER OF GIFT. Is it possible to do a TRANSFER OF GIFT but still have some money change hands? Because as I understand it, the definition of a TRANSFER OF GIFT is where NO money changes hands. I am the sole owner of the property in the paperwork so I don't believe a TRANSFER OF EQUITY is possible. 

Can we not just get a TRANSFER OF GIFT with a solicitor and agree privately what she should/can transfer to me? I'm aware of inheritance tax if either of us dies in 7 years. 

She doesn't have a consistent income so it's unlikely she will be able to get a mortgage, hence my suggestion of paying off the mortgage with my money from my parents estate. 

I have already enquired with a mortgage advisor and a solicitor but wanted to check on here so I don't get charged for phone calls etc!

Thank you. 

Linton

fluffy_kittens2024 said:

Long story short, I own a flat worth around £550,000, with about £96k left on the mortgage. My sister would like to move in there and "pay me out" with her share from our deceased parents estate - not for the full amount that it's worth, but for perhaps half. 

My question is, if I take care of the outstanding mortgage, I can transfer ownership of the flat to her via a TRANSFER OF GIFT. Is it possible to do a TRANSFER OF GIFT but still have some money change hands? Because as I understand it, the definition of a TRANSFER OF GIFT is where NO money changes hands. I am the sole owner of the property in the paperwork so I don't believe a TRANSFER OF EQUITY is possible. 

Can we not just get a TRANSFER OF GIFT with a solicitor and agree privately what she should/can transfer to me? I'm aware of inheritance tax if either of us dies in 7 years. 

She doesn't have a consistent income so it's unlikely she will be able to get a mortgage, hence my suggestion of paying off the mortgage with my money from my parents estate. 

I have already enquired with a mortgage advisor and a solicitor but wanted to check on here so I don't get charged for phone calls etc!

Thank you. 

In my view as a non-lawyer...
Sounds mad to me.  Solicitors have standard procedures for managng house sales that have been proved to work over centuries.  Too many things can go wrong if transactions are handled incorrectly.  

So your idea is that you, out of the goodness of your heart, give your sister a flat and she happens to give you some money because she is just being sisterly?  What happens if your sister gratefully accepts the flat but doesnt pay you any money?  What happens if she dies before giving you the money? Since these are purely gifts I cant see you being able to claim in the courts that you are due any payment. Would you want to sue your sister?

Exactly what you want the end state to be  is far from clear to me so if it's not clear to you I strongly suggest that you first decide precisely, with numbers, what you want.  Does your sister own the whole flat or is the ownership shared.  Does your sister give you any money either directly or via the distribution of your inheritances? How much? 

Why not pay off the mortgage with your inheritance and then just give the flat to your sister or sell it at a low price? Much simpler.  You could put a charge on the flat so that you get paid when it is sold.   In any case all this should be done through a solicitor.

ciderboy2009

Is this an elaborate method to try to avoid stamp duty?

If so then it won't work - the tax man has seen it all before.

user1977

You're selling a share in your property to your sister. Ignore all the nonsense about "gifts".

Bookworm105

go to the @Land_Registry registry website and work out which is the correct form to use, hint: it is not a "gift" form 

Olinda99

you can sell your flat to your sister for whatever amount you want - it is totally your decision

the only proviso is that if it is below market value you're still have to pay stamp duty based on the market value 

forget gifts etc just fill out the form saying what the amount paid was

fluffy_kittens2024

ciderboy2009 said:

Is this an elaborate method to try to avoid stamp duty?

If so then it won't work - the tax man has seen it all before.

Nope the mortgage advisor has told us all about that. It's just that my sister really wants the flat, and I want to sell it. So we wondered if I would be able to "sell" it to her for a smaller amount than the market value. I just don't know the name for the process, because as I understand it, a GIFT OF DEED involves no money being handed over. 

fluffy_kittens2024

user1977 said:

You're selling a share in your property to your sister. Ignore all the nonsense about "gifts".

Yeah, I just guess what would this be classed as? A TRANSFER OF GIFT involves no money being exchanged so I was wondering if there was a official/legal name for what we planned to do. i.e transfer the house to my sister's name for a much smaller amount than the house is worth. Sorry it's so confusing and am reluctant to pay a big consultation fee to a solicitor if it turns out none of this is possible! 

jackieblack

You’re just selling it for an amount below market value, you’re over complicating it by talking about gifts

fluffy_kittens2024

jackieblack said:

You’re just selling it for an amount below market value, you’re over complicating it by talking about gifts

yeah, sorry this is all new to me. Thanks. 

Herzlos

(not a lawyer but) presumably you can gift your sister the short fall between what she's providing and a fair market value. It'd still be a sale and she'd still be on the hook for the stamp duty.

In practice that'd mean that instead of the solicitor taking, say, £550k from your sister and passing it to you, they'd only take £300k.