Big mistake transferring house deeds - help!

Bananarama66

5 years ago, my father sold the property we grew up in and bought a new property (mortgage free) which somehow his lawyers permitted him to buy in my name at the final hurdle. He wanted to do this after some (poor) advice from family members to protect our inheritance from his new partner and her children as she had not contributed at all to the costs of buying the house although they moved in together.

When my partner and I tried to buy our own place for the first time, I was told we would have to pay the additional 3% stamp duty because I own a property, even though I have never lived there, and my primary residence was rented accommodation and had been for many years.

 

I want to be out of this mess and be free of the burden of owning a property that isn't really mine and from which I have never profited. The property is well below the inheritance tax and will likely never reach the threshold so it was overall extremely bad advice which if I had my own legal advice at the time, I'm sure I would have been advised against.

 

To be clear, neither myself nor my father have benefitted in any way from having the property in my name. Additionally, I have also just found that you must pay tax on a property you own but don't live in when selling said property - so overall a BIG mess.

 

My question is, can I just transfer the deeds to the house back to my father and claim back my stamp duty?

Keep_pedalling

Unfortunately not as it was never your primary residence. You will also face a CGT liability on any gain in value since the original purchase. 

Section62

Bananarama66 said:

5 years ago, my father sold the property we grew up in and bought a new property (mortgage free) which somehow his lawyers permitted him to buy in my name at the final hurdle. He wanted to do this after some (poor) advice from family members to protect our inheritance from his new partner and her children as she had not contributed at all to the costs of buying the house although they moved in together.

....

You would have to have been involved and a willing participant to the purchase, otherwise the transaction would likely be fraudulent.  Did the solicitor acting for him/you offer advice on the implications for you, or better still, tell you to get independent legal advice?

About the only way of you getting out of the situation with stamp duty/CGT would be if you weren't aware the property was being purchased in your name - i.e. that your father was committing fraud without your knowledge.  Obviously there would be implications for your father if that were the case.

NorthYorkie

I agree with the above.

If the house were to be sold, who gets the sales proceeds??

Do you have any evidence that your father did not intend you to be the beneficial owner, of the property and that the purported purchase was just a sham? (e.g. any correspondence between your father and the solicitors?). If not, then you might find life easier just to pay the additional SDLT

NorthYorkie

You might like to read the SDLT manual at SDLTM09785 - SDLT - higher rates for additional dwellings: Condition C - further information - HMRC internal manual - GOV.UK in particular the following;

Cases of no beneficial ownership

Where an individual is one of the legal owners of another dwelling (their name is on the title at the Land Registry) but they have absolutely no beneficial interest in that other dwelling, they will not own an interest in that other dwelling that meets Condition C. This would have to be evidenced in writing. Any entitlement to capital proceeds from the sale of the property, to income or to occupy the property would likely mean that they do have a beneficial interest.

When the property was originally purchased either you or your father would presumably have had to sign an SDLT notification which you will now have to show was incorrect.

Grumpy_chap

Bananarama66 said:

5 years ago, my father sold the property we grew up in and bought a new property (mortgage free) which somehow his lawyers permitted him to buy in my name at the final hurdle. He wanted to do this after some (poor) advice from family members to protect our inheritance from his new partner and her children as she had not contributed at all to the costs of buying the house although they moved in together.

When my partner and I tried to buy our own place for the first time, I was told we would have to pay the additional 3% stamp duty because I own a property, even though I have never lived there, and my primary residence was rented accommodation and had been for many years.

 

I want to be out of this mess and be free of the burden of owning a property that isn't really mine and from which I have never profited. The property is well below the inheritance tax and will likely never reach the threshold so it was overall extremely bad advice which if I had my own legal advice at the time, I'm sure I would have been advised against.

 

To be clear, neither myself nor my father have benefitted in any way from having the property in my name. Additionally, I have also just found that you must pay tax on a property you own but don't live in when selling said property - so overall a BIG mess.

 

My question is, can I just transfer the deeds to the house back to my father and claim back my stamp duty?

So, by putting his house into your name, your Father has caused you to lose First Time Buyer status for SDLT.

You also now find yourself liable for additional rate SDLT when actually buying yourself a house to live in.

When your Father's house is sold, you will be liable for CGT on the gain in value.

As this appears to have been a GWR (gift with reservation of benefit), your Father's house will remain in his Estate for IHT purposes and also any assessment of capital available to support his care needs finance if ever required.

Unless your Father insists that the final of those four paragraphs does not apply, in which case you can evict your Father and anyone else living at the property and either move in or sell up.

Bananarama66

Section62 said:

Bananarama66 said:

5 years ago, my father sold the property we grew up in and bought a new property (mortgage free) which somehow his lawyers permitted him to buy in my name at the final hurdle. He wanted to do this after some (poor) advice from family members to protect our inheritance from his new partner and her children as she had not contributed at all to the costs of buying the house although they moved in together.

....

You would have to have been involved and a willing participant to the purchase, otherwise the transaction would likely be fraudulent.  Did the solicitor acting for him/you offer advice on the implications for you, or better still, tell you to get independent legal advice?

About the only way of you getting out of the situation with stamp duty/CGT would be if you weren't aware the property was being purchased in your name - i.e. that your father was committing fraud without your knowledge.  Obviously there would be implications for your father if that were the case.

Apologies I wasn't clear. I did sign the paperwork for the property to be in my name. I was in the midst of university exams and I had no clue at the time about how this would impact me nor did the solicitor acting for my father offer advice on the implications for me.

I have since contacted the lawyers firm and they have advised I can transfer the property back into my father's name for a fee. Would this be a bad move?

Bananarama66

NorthYorkie said:

I agree with the above.

If the house were to be sold, who gets the sales proceeds??

Do you have any evidence that your father did not intend you to be the beneficial owner, of the property and that the purported purchase was just a sham? (e.g. any correspondence between your father and the solicitors?). If not, then you might find life easier just to pay the additional SDLT

The house would only be sold if my father wanted to move and then the sales proceeds would go towards his new home, not to me. 

Bananarama66

Bananarama66 said:

NorthYorkie said:

I agree with the above.

If the house were to be sold, who gets the sales proceeds??

Do you have any evidence that your father did not intend you to be the beneficial owner, of the property and that the purported purchase was just a sham? (e.g. any correspondence between your father and the solicitors?). If not, then you might find life easier just to pay the additional SDLT

The house would only be sold if my father wanted to move and then the sales proceeds would go towards his new home, not to me. 

Additionally, any profit from the selling of the house would also go to my father. 

Bananarama66

Just to add here, my father is an extremely kind man and was just doing what he thought would be best for me in the long term. He would not have been aware of these consequences. 

lincroft1710

Bananarama66 said:

Just to add here, my father is an extremely kind man and was just doing what he thought would be best for me in the long term. He would not have been aware of these consequences. 

Why would it be "best for you in the long term"?