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    • FamilySaver
    • By FamilySaver 12th Jul 18, 6:34 PM
    • 4Posts
    • 3Thanks
    FamilySaver
    Gifting house
    • #1
    • 12th Jul 18, 6:34 PM
    Gifting house 12th Jul 18 at 6:34 PM
    Right this might be a long one, me and my wife bought a house to rent to my sister who is a single parent and couldn't get a mortgage on her own. Deposit was made up from part early inheritance for my sister from our parents part deposit by me and my wife then the remainder through a mortgage. The house and mortgage is totally in me and my wife's name.
    Now the problem me and my wife now want to buy our own house (we are currently in military housing so similar to renting) because it will be our second property we will be stung by a higher stamp duty aswell as our mortgage broker wanting atleast 15% (we have 10%)

    Now our questions how can we go about transferring the house over to my sister as she should be able to get a mortgage as the equity in the house is 55% an she is in better employment status now.
    Can anyone suggest a financial advisor who deals with transferring of mortgages or would this not be what we need.
    My sister technically owns most of the house as she has been paying the full mortgage and has nearly paid back what we put in as a deposit. The sum put in by my parents was a gift for her not me although it went into my bank (there will is all sorted for covering her early inheritance)

    Sorry for the long post. We were gutted after being told today after we found a house that we couldn't borrow enough even though we can afford repayments fine.
    First house deposit fund started 04/2014- 8,200 target 16,000 by 2016
Page 1
    • middleclassbutpoor
    • By middleclassbutpoor 12th Jul 18, 6:43 PM
    • 381 Posts
    • 322 Thanks
    middleclassbutpoor
    • #2
    • 12th Jul 18, 6:43 PM
    • #2
    • 12th Jul 18, 6:43 PM
    You would need to "sell" the house to her..

    She would need to apply for her own mortgage and then you would be free to state that upon purchase of the property you have found the other debt will be repaid in your name. In essence you are creating a chain with you in the middle.

    The selling bit would need a solicitor but clearly not an estate agent.

    You should seek out a mortgage adviser as there will be likely considerations about the equity in the house transferring across... Im not sure if its gifted deposit/below market value considerations but by seeking a mortgage adviser to help should be the first step
    • amnblog
    • By amnblog 13th Jul 18, 7:22 AM
    • 10,831 Posts
    • 4,313 Thanks
    amnblog
    • #3
    • 13th Jul 18, 7:22 AM
    • #3
    • 13th Jul 18, 7:22 AM
    I'm surprised that you have not discussed this with your current mortgage broker.

    Subject to credit and affordability your Sister can buy the property from you at a price you all agree using the equity in the property as her deposit.

    Provided that purchase goes through on the same day, or before, your own purchase, you will not pay HSDLT.

    Not all Lenders will be amenable to your Sister purchase so you will need some advice on that. Both parties will also need legal advice.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • AnotherJoe
    • By AnotherJoe 13th Jul 18, 7:41 AM
    • 11,472 Posts
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    AnotherJoe
    • #4
    • 13th Jul 18, 7:41 AM
    • #4
    • 13th Jul 18, 7:41 AM
    As said should be straightforward*, its not a transfer, sister buys the property from you in the same way as if you owned it and someone else was buying it.



    You then have the money from the sale, plus also dont have an outstanding mortgage, so your affordability will jump.



    * there may be one complication, Capital Gains Tax. It may be this doesn't apply as you are in the military and I know there can be exceptions, but if there arent, then you'll need to deal with that. And it gets more complex as you are selling to a connected person so any CGT may be based on the notional value of the house rather than what you actually sell it for.
    • Pixie5740
    • By Pixie5740 13th Jul 18, 8:21 AM
    • 13,276 Posts
    • 19,106 Thanks
    Pixie5740
    • #5
    • 13th Jul 18, 8:21 AM
    • #5
    • 13th Jul 18, 8:21 AM
    Your sister isn't "technically" the owner. You are the legal owner but what you ready need to establish is which one of you is the beneficial owner. Do not attempt to DIY this, seek professional advice.
    • getmore4less
    • By getmore4less 13th Jul 18, 8:53 AM
    • 33,476 Posts
    • 20,229 Thanks
    getmore4less
    • #6
    • 13th Jul 18, 8:53 AM
    • #6
    • 13th Jul 18, 8:53 AM
    The basic have been covered they buy the place off you.

    This could get messy.

    Did you establish the beneficial ownership at the time.

    Did you declare the true status of the deposit/beneficial ownership to the lender.

    Have you been declaring the income?
    they have been paying your mortgage that's taxable income.

    There will be potential CGT issues but there may be some extra exemptions for you being military.
    • FamilySaver
    • By FamilySaver 13th Jul 18, 3:41 PM
    • 4 Posts
    • 3 Thanks
    FamilySaver
    • #7
    • 13th Jul 18, 3:41 PM
    • #7
    • 13th Jul 18, 3:41 PM
    Yes the cgt I'm not sure about it was our first house and it's only gone up by 10to 20k compared to the price we paid. As for the ownership everything was done in mine and my wife's name. The money from my parents was done through the bank and put down as a gift the bank and my financial advisor at the time said that was the best way. As for the money my sister has been paying me each nothing has been declared as she has only been giving me the exact amount of the mortgage so was told I didn't need to declare. The extra money she has been paying has been sent to my sister each month this was to repay the deposit we put in when we bought the house.
    My wife doesn't earn enough to be taxed so was told this was the best way to do it.
    First house deposit fund started 04/2014- 8,200 target 16,000 by 2016
    • foxy-stoat
    • By foxy-stoat 13th Jul 18, 3:48 PM
    • 3,040 Posts
    • 1,705 Thanks
    foxy-stoat
    • #8
    • 13th Jul 18, 3:48 PM
    • #8
    • 13th Jul 18, 3:48 PM
    As for the money my sister has been paying me each nothing has been declared as she has only been giving me the exact amount of the mortgage so was told I didn't need to declare.
    Originally posted by FamilySaver
    We were told wrong then.

    Also if you rent to family you need a regulated BTL mortgage - is this a residental mortgage or BTL that you took out?

    I think you need to get out of this situation as soon as possible, work out your tax liability and use the Let Property Campaign and pay whatever tax you should of paid upto now.

    Good lucks
    • FamilySaver
    • By FamilySaver 13th Jul 18, 5:52 PM
    • 4 Posts
    • 3 Thanks
    FamilySaver
    • #9
    • 13th Jul 18, 5:52 PM
    • #9
    • 13th Jul 18, 5:52 PM
    As I am in the military nationwide was happy for me to use a normal mortgage and my sister to be living in there. However yes we are wanting this sorted asap.
    First house deposit fund started 04/2014- 8,200 target 16,000 by 2016
    • Thrugelmir
    • By Thrugelmir 13th Jul 18, 6:58 PM
    • 61,035 Posts
    • 54,235 Thanks
    Thrugelmir
    My sister technically owns most of the house as she has been paying the full mortgage and has nearly paid back what we put in as a deposit.
    Originally posted by FamilySaver
    You've been receiving rent. Rent is in essence taxable income.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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