Removal of name in title deeds

hgd7

Hello

My parents have a property which they live in and have no mortgage. They put my name in the title deeds many moons ago. All with equal shares. However I now plan to purchase my own residential property, starting my family. My question is, can I remove my name from the title deeds in order to avoid the higher rate of stamp duty in any potential new home? I do not contribute anything to my parents home or paid in any way. They stated they did this to help reduce any future IHT. The house is worth £800k at present. One thing I am thinking is as they do not own any other assets or insurance, there threshold will be under £1m as a couple and I may not even end up paying any IHT anyway if I was taken off the deeds. Keeping me on means higher rate of SDLT.  

se2020

Unfortunately once you have been an owner you are no longer a first time buyer so you can't use the discounted sdlt rate, Lisa bonus, and so on. 

On the upside, you already own 1/3 of a house so have that £266k asset. 
I expect parents will be happy to purchase your share for whatever it is going to cost you extra in stamp duty rather than let you sell your part to a stranger..

doodling

Hi,

If you don't live in the property you part own  you might need to consider how much Capital Gains Tax would be due if you do sell or give away your share, bearing in mind that CGT may be due based on market value rather than the amount of actual money paid if family is involved.

hgd7

se2020 said:

Unfortunately once you have been an owner you are no longer a first time buyer so you can't use the discounted sdlt rate, Lisa bonus, and so on. 

On the upside, you already own 1/3 of a house so have that £266k asset. 
I expect parents will be happy to purchase your share for whatever it is going to cost you extra in stamp duty rather than let you sell your part to a stranger..

I am not looking to purchase as a first time buyer (as I own a BTL) - simple trying to purchase my own residential, so will have to pay the standard SDLT for a property over £250k. 

My share in my parents property means nothing to me in the sense of ownership - I do not contribute and never have, it simple feels like by putting my name on the deed is costing me £xxxxxx in any future purchase. I was thinking to simply remove my name from the deed at £0 cost to anyone - no money to ever or has exchanged hands. 

MyRealNameToo

hgd7 said:

se2020 said:

Unfortunately once you have been an owner you are no longer a first time buyer so you can't use the discounted sdlt rate, Lisa bonus, and so on. 

On the upside, you already own 1/3 of a house so have that £266k asset. 
I expect parents will be happy to purchase your share for whatever it is going to cost you extra in stamp duty rather than let you sell your part to a stranger..

I am not looking to purchase as a first time buyer (as I own a BTL) - simple trying to purchase my own residential, so will have to pay the standard SDLT for a property over £250k. 

My share in my parents property means nothing to me in the sense of ownership - I do not contribute and never have, it simple feels like by putting my name on the deed is costing me £xxxxxx in any future purchase. I was thinking to simply remove my name from the deed at £0 cost to anyone - no money to ever or has exchanged hands. 

If you own a BTL what difference will having a part share of your parents home? 

If cash moves or not doesnt change what taxes are due on your disposal of part of your parents home.

hgd7

doodling said:

Hi,

If you don't live in the property you part own  you might need to consider how much Capital Gains Tax would be due if you do sell or give away your share, bearing in mind that CGT may be due based on market value rather than the amount of actual money paid if family is involved.

I do live in it at present and at the time of putting my name on - also market value is pretty much the same as when they put my name on to now

tetrarch

My In-Laws presented Mrs Tet with the deeds signed over into her name back in the late 90's without any discussion or notice whatsoever

We immediately reversed the transaction

It doesn't seem right that someone else can give you a tax liability without your permission

Is it not possible to just reverse the transfer, wait for the transfer to appear on LR and then carry on like it never existed? 

Regards

Tet

Keep_pedalling

As you have been living there then you will have no CGT liability if you hand back your share to your parents. That also means this was not a gift with reservation of benefit and if they did this over 7 years ago then giving it back should add no complications to their IHT liability. (It gets a little more complicated if it was less than 7 years). 

Tying in this change with the purchase of your new home should avoid the additional SDLT as you will be disposing of your current residence. 

SDLT_Geek

Keep_pedalling said:

As you have been living there then you will have no CGT liability if you hand back your share to your parents. That also means this was not a gift with reservation of benefit and if they did this over 7 years ago then giving it back should add no complications to their IHT liability. (It gets a little more complicated if it was less than 7 years). 

Tying in this change with the purchase of your new home should avoid the additional SDLT as you will be disposing of your current residence. 

Good points @Keep_pedalling

As the facts trickle out from OP, it seems OP's share in their parents house is potentially the solution to the SDLT problem caused by OP already owning a buy to let property!!

sheenas

Firstly consult an IHT expert as I don’t think the idea that putting children’s names on the deeds and continuing to live in the property rent free is a plausible tax reduction policy. 

It’s now slightly complicated but I don’t see you giving away something that you don’t pay for as a problem. 

Keep_pedalling

sheenas said:

Firstly consult an IHT expert as I don’t think the idea that putting children’s names on the deeds and continuing to live in the property rent free is a plausible tax reduction policy. 

Normally it is not, but as the child in question has been living with their parents since they were gifted a 1/3 share  it is not classed as a gift with reservation of benefit. Had they gifted a larger share or all of it would have been more problematic. Consulting a tax specialist before they gifted would have been a good idea but it is pointless now.