Removing name off title deeds

lr1277

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 

I too am in a similar situation. In that my parents bought an investment property and I think there was some tax wheeze which meant having 3 owners (me being one of them) led to some kind of tax reliefs. I don't know the details. I was an 18 year old student at the time and had no job income, but the mortgage company accepted me as one of the borrowers. Those were different times.

We are now in a situation where my dad has passed and the last I heard the tenant doesn't want to leave for somewhat understandable reasons.

Despite the tenant's wishes mum and I want to sell the property as it would be on less headache.

silvercar

lr1277 said:

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 

I too am in a similar situation. In that my parents bought an investment property and I think there was some tax wheeze which meant having 3 owners (me being one of them) led to some kind of tax reliefs. I don't know the details. I was an 18 year old student at the time and had no job income, but the mortgage company accepted me as one of the borrowers. Those were different times.

We are now in a situation where my dad has passed and the last I heard the tenant doesn't want to leave for somewhat understandable reasons.

Despite the tenant's wishes mum and I want to sell the property as it would be on less headache.

You can issue a section 21 under current regulations. No need to give a reason, you want your property back and that is it. 

silvercar

lr1277 said:

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.

There are some errors in this calculation. Property tax is 18% or 28% depending on your personal tax rate not 24%.

no such thing as nominal sale price when people are related, it is deemed to be at market value even if no money changes hands.

i posted my calculation before.

lr1277

This web page says 24% tax on gains from residential property from 6/4/2025.

https://www.gov.uk/capital-gains-tax/rates

Oops. Sorry. The 24% is if you pay higher rate income tax.

If you pay basic rate, the CGT rate is 18%.

Which then leads into which tax band is the OP in? As I said, when I paid this tax, the capital gain was added to all my income to calculate my tax band. 

If the calculation now is the same as back then, as I suggested above the OP has a nominal £50k plus any other taxable income, the chances are the OP is in the higher rate bandl. The OP should do the calculation themselves or pay a professional to do it.

Cheryl2022

I earn 20k per annum so I not in the higher tax bracket 

lr1277

Sorry this is starting to get too complicated for me.

My suspicion is that if you add your £20k salary to your nominal £50k gain this puts you in the higher tax band so needing to pay 24%.

However some quick googling and I can't find anything that says you have to add your capital gain to your income to work out your tax band. 

If you don't want to pay a professional, you could ask on the tax cutting board. There should be some knowledgeable people there who can tell you the calculation or at least point you in the right direction.

Sorry I can't be more helpful.

Cheryl2022

My mum says she's called HMRC and checked about the CGT and they have said I won't be liable for any CGT when removing my name off the deeds as it's not a second home as it's my dads only home and I don't own another property, I am so confused right now where do I stand? 

lr1277

I suppose the other calculation is which is more:

the CGT on gifting your share of the property

or

the extra stamp duty on buying a property.

lr1277

Cheryl2022 said:

My mum says she's called HMRC and checked about the CGT and they have said I won't be liable for any CGT when removing my name off the deeds as it's not a second home as it's my dads only home and I don't own another property, I am so confused right now where do I stand? 

The answer HMRC gave partly depends on what your mum told them.

Again from my experience from 8 years ago, I sold my property after having rented it out. I was living elsewhere in rented accommodation. I had to pay the CGT.

My understanding is that CGT is not applicable when selling your principal residence. By principal residence I mean this is where you live full-time. From what you have said, you moved out in 2008. Where you lived from 2008 onwards became your principal residence.

Hopefully others will weigh in giving you more clarity on the situation.

silvercar

lr1277 said:

Cheryl2022 said:

My mum says she's called HMRC and checked about the CGT and they have said I won't be liable for any CGT when removing my name off the deeds as it's not a second home as it's my dads only home and I don't own another property, I am so confused right now where do I stand? 

The answer HMRC gave partly depends on what your mum told them.

Again from my experience from 8 years ago, I sold my property after having rented it out. I was living elsewhere in rented accommodation. I had to pay the CGT.

My understanding is that CGT is not applicable when selling your principal residence. By principal residence I mean this is where you live full-time. From what you have said, you moved out in 2008. Where you lived from 2008 onwards became your principal residence.

Hopefully others will weigh in giving you more clarity on the situation.

If it’s been rented out, there is no question that it can’t be claimed as your principal residence.

lr1277 said:

Cheryl2022 said:

My mum says she's called HMRC and checked about the CGT and they have said I won't be liable for any CGT when removing my name off the deeds as it's not a second home as it's my dads only home and I don't own another property, I am so confused right now where do I stand? 

The answer HMRC gave partly depends on what your mum told them.

Again from my experience from 8 years ago, I sold my property after having rented it out. I was living elsewhere in rented accommodation. I had to pay the CGT.

My understanding is that CGT is not applicable when selling your principal residence. By principal residence I mean this is where you live full-time. From what you have said, you moved out in 2008. Where you lived from 2008 onwards became your principal residence.

Hopefully others will weigh in giving you more clarity on the situation.

Agree. If you Mum said things like ‘it’s been her only home’ the advisor may have thought your mum meant you have lived in it all the time. Which was why I’d asked if you’d flitted around, with your parents home as your only main residence.  I suspect some of the time when you moved out you may have still considered it your home, but it depends on where else you have formally lived.