Unusual mortgage situation please help

Cheryl2022

I'm not sure of the dates - I think it was around 2002 that they bought it and I stayed until around 2008. How does CGT work I have no idea? I never paid anything towards the house 

silvercar

Cheryl2022 said:

I'm not sure of the dates - I think it was around 2002 that they bought it and I stayed until around 2008. How does CGT work I have no idea? I never paid anything towards the house 

You pay CGT on any gain in the value of property you own that isn’t your principal private residence (PPR). 

First thing is to check that you are named as one of the owners on the deeds, as it may be that you guaranteed the mortgage without going on the deeds. 

If you are liable, then you would be exempt for the time it was your home and the last 9 months of ownership, so if you take your name off the deeds in 2025, you have a period of ownership lasting 23 years and exemption for 6 yrs 9 months = 6.75 yrs. all calculations are actually done in months,  but this gives you an idea. So you take the current value less the cost in 2002, less buying costs for the base figure, let’s call this X. Assume you had joint ownership with both your parents, so your share is a third - X/3. Then take 16.25/ 23 = 70.6% of that. So X/ 3 x 70.6% = X x 23.6% taxed at 18% or 28% or a combination depending on your own tax situation.

there is the argument as to whether your parents were the beneficial owners and you went on the mortgage only to enable the purchase. That is an argument with the revenue you may or may not win.

housebuyer143

CGT aside, first thing to do is to download the title deeds and check you are not named on the property. You being named will stop you in your tracks because you will be liable for additional stamp duty. If you are. If you are on there then you need to come off it. 

How did they get an unsecured loan in your name without your agreement? 

In answer to your question, you can certainly try and not disclose it - you are right that many don't use TransUnion but it can amount to fraudulent behaviour and will look bad on you if you don't disclose it. Potentially you can play dumb the first time and try your luck, but if it's picked up I wouldn't try it again. 

ian1246

Op, it sounds like your "loving" parents have done you up like a kipper. If your on the deeds of the property, given the destructive and exploitative nature of your parents to you, i wouldn't be coming off the deeds for free and infact would be insisting on the parents now buying me out to get me off the deeds- a minimum of £16,000 (so you can settle the unsecured debt your apparently an unwitting participant to), plus whatever your CGT liability will be, plus whatever your lost stamp duty privilege will be (first time buyers threshold is higher than normal), plus frankly an additional value to offset the higher interest rate your going to be paying on a mortgage, due to their default on the unsecured loan.

If they don't play ball, you take them to court to force a house sale - after all, your a joint owner are you not?

Their actions will set you back £10,000's in CGT liability and stamp duty - and this before factoring in lost benefits such as LISA'S or Help to Buy.

Utterly appalling parents - take them to the cleaners - and frankly, if your parents were foolish enough to make you a joint tenant (rather than tenant in common) on that property, you could own 50% of it.

If thats the case, Its up to you whether you want to return the favour of how they've treated you & demand the full 50% - but at the bare minimum, they need to make good the extra costs your going to sustain due to their selfishness.

Just when your starting out in building an independent life and your parents decide to cripple you for their own gain.

Cheryl2022

silvercar said:

Cheryl2022 said:

I'm not sure of the dates - I think it was around 2002 that they bought it and I stayed until around 2008. How does CGT work I have no idea? I never paid anything towards the house 

You pay CGT on any gain in the value of property you own that isn’t your principal private residence (PPR). 

First thing is to check that you are named as one of the owners on the deeds, as it may be that you guaranteed the mortgage without going on the deeds. 

If you are liable, then you would be exempt for the time it was your home and the last 9 months of ownership, so if you take your name off the deeds in 2025, you have a period of ownership lasting 23 years and exemption for 6 yrs 9 months = 6.75 yrs. all calculations are actually done in months,  but this gives you an idea. So you take the current value less the cost in 2002, less buying costs for the base figure, let’s call this X. Assume you had joint ownership with both your parents, so your share is a third - X/3. Then take 16.25/ 23 = 70.6% of that. So X/ 3 x 70.6% = X x 23.6% taxed at 18% or 28% or a combination depending on your own tax situation.

there is the argument as to whether your parents were the beneficial owners and you went on the mortgage only to enable the purchase. That is an argument with the revenue you may or may not win.

Thank you so could you help me work this out.
I am named on the deeds with my dad and I think they bought the house for 120k in 2002 I lived there for approx 4 years then moved out. The house is now worth around £220k thank you 🙏 

Flugelhorn

ian1246 said:

O
Utterly appalling parents - take them to the cleaners - and frankly, if your parents were foolish enough to make you a joint tenant (rather than tenant in common) on that property, you could own 50% of it.

would be interesting to know how the property is held  - OP could have quite an asset there, doubt the parents realise it 

RipleyG

ian1246 said:

Op, it sounds like your "loving" parents have done you up like a kipper. 

Utterly appalling parents - take them to the cleaners. 

That's a fairly antagonistic view. In 2002 there was no such thing as a LISA, no higher rate stamp duty for buying a second property, and first time buyers didn't get higher stamp duty tiers.

An alternative view is that they did something they thought was right at the time, the financial landscape changed over the following 20 years and they weren't financially tuned in to the changes so didn't think to review things. 

Flugelhorn

RipleyG said:

ian1246 said:

Op, it sounds like your "loving" parents have done you up like a kipper. 

Utterly appalling parents - take them to the cleaners. 

That's a fairly antagonistic view. In 2002 there was no such thing as a LISA, no higher rate stamp duty for buying a second property, and first time buyers didn't get higher stamp duty tiers.

An alternative view is that they did something they thought was right at the time, the financial landscape changed over the following 20 years and they weren't financially tuned in to the changes so didn't think to review things. 

agree - things have changed. Can imagine it was the sort of thing that my parents might have thought was a good idea at some point and once done, it would head in the sand and nothing more would ever be thought or done about it 

Brie

I wonder if it would help if the OP sent a request to the loan company for a copy of the credit agreement she would have had to sign for the loan.  Obviously if the loan has just been discovered then she wouldn't have known and so wouldn't have signed in which case, I think, she shouldn't have it on her credit report.  It may however show that her parents had acted fraudulently. 

ian1246

RipleyG said:

ian1246 said:

Op, it sounds like your "loving" parents have done you up like a kipper. 

Utterly appalling parents - take them to the cleaners. 

That's a fairly antagonistic view. In 2002 there was no such thing as a LISA, no higher rate stamp duty for buying a second property, and first time buyers didn't get higher stamp duty tiers.

An alternative view is that they did something they thought was right at the time, the financial landscape changed over the following 20 years and they weren't financially tuned in to the changes so didn't think to review things. 

And what of the unsecured loan which the OP knows little of, yet which has been defaulted on?

That implies at best the OP's parents have taken advantage of comparatively young age / inexperience and at worst, demonstrated gross incompetence by failing to pay back their debt - negatively impacting the OP. There's also the possibility they've committed fraud if ths OP hasnt signed such a loan agreement. 

Children & young adults trust their parents to do what's in their best interests. How have the OP's parents done that?