Removing name off title deeds

Cheryl2022

Hi if that's the case then it could be considered that I lived there for 8 -10 years until I got married. How is this checked by the tax office? 

lr1277

I don't know if the following matters in terms of calculating your CGT liability.

Sorry about this indelicate question. In your initial post you mentioned parents.

Was your mum ever a part-owner of the property? If she was, what happened to her share?

From what I can work out, this is your family's home. Was your mum in the picture at the time of the purchase? If she was in the picture, it seems odd to me she isn't on the title deeds.

Cheryl2022

It's okay I don't mind answering questions, I appreciate everybody's help on here. No my mum was never on the mortgage it was the family home and I lived there for a number of years before moving out into rented accommodation with my OH and now I want to buy a home myself. I didn't even know about CGT before I posted all this. I thought because there was no money involved as it isn't a sale I haven't ever gained anything from this, it was simply for my parents to afford the house

lr1277

A couple of things to watch out for.

The CGT rate you pay is based on your total income that is salary, dividends, interest and most importantly your capital gain. The capital gain may tip you into the higher CGT rate. My experience from 8 years ago, was that I had very little income, so I was expecting to be on the lower CGT rate. However you need to add the capital gain, which in my case was over £100k. So that put me in the higher CGT bracket. More information on the government's web pages.

More recently it has been introduced that as the seller  you have to pay the CGT liability within either 30 or 60 days of the transaction. This was not in place when I made my sale so I don't know too much about it. I think it involves getting a code from HMRC to pay this specific tax bill, but I am sorry you will need to do your own research on that, or maybe other helpful posters can provide advice. I also don't know if this means you have to submit a self-assessment tax return for the year in question.

I wasn't clear about this from reading the earlier posts. Even if no money changes hands when you make your gift to your parent, you still have a CGT liability based on the purchase price, any other factors like residency and the nominal sale price. So if you gift your share and receive no money for the transaction, if there is a CGT liability, you still have to pay it.

In my case I got an accountant to submit that particular tax return as I didn't want to get it wrong. 

As an aside, you need to do the calculation yourself to make sure the accountant is right. Crazy right?

Initially my accountant said the tax would be a much lower figure than I was expecting. I was pleased but I told them that. When my return was checked by a 2nd accountant they sheepishly called me with a higher figure, which was about the figure I was expecting.

Cheryl2022

Oh my goodness only 30-60 days to pay when I am not actually going to be getting any money for taking my name off the deeds seems impossible I don't have that kind of money 

Isthisforreal99

Cheryl2022 said:

Oh my goodness only 30-60 days to pay when I am not actually going to be getting any money for taking my name off the deeds seems impossible I don't have that kind of money 

Unfortunately it was an ill-advised thing to do. Was there a particular reason why you were on the deeds in the first place?

Cheryl2022

I was asked to go on a mortgage with my dad when I was 18 so that my parents could afford their house but then they never took me off it and have completely ruined me financially. I didn't know I was on the deeds 

BikingBud

Could ask Ange.

silvercar

Cheryl2022 said:

I was asked to go on a mortgage with my dad when I was 18 so that my parents could afford their house but then they never took me off it and have completely ruined me financially. I didn't know I was on the deeds 

You must have signed the paperwork. Or someone put your signature on the paperwork.

Were you working at 18? Did your parents need your income to be taken into account to be able to get the mortgage?

”completely ruined me financially” is a bit of an exaggeration! I calculated a CGT liability approaching 10k. 

I think you need a family discussion. Depending on your relationship you could start by telling your parents you need to sell your half of the house and offer it to them at a discount!

lr1277

As suggested earlier, do your parents have the money to give you so that you can pay the tax?

You suggested earlier a buying price of £120k and a potential current price of £220k. I don't know how to factor in the residency.

So for simplicity let's say the overall gain was £100k. You are entitled to 1/2 that gain so £50k.

My reading of the tax web pages is that CGT on property is 24%. That could be a tax bill of £12k on the (potential) £50k gain.

Could your parents gift you the £12k (or whatever the figure ends up being)?

A word of advice; don't try and lower the nominal sale price meaning there is less tax to pay. It can lead to difficulties later, none of which I can remember at the moment.

There is one unpalatable solution. Sell the property to somebody else (i.e. on the open market) with both you and your parents moving out. Then the conveyancing solicitor would have to give you your half of the proceeds. Then you would have the money to pay the tax bill. But your parents would have to find somewhere to live but they could then buy/rent somewhere for them to live for which they were 100% in control.