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ExperiencedLawyer
ExperiencedLawyer, Solicitor
Category: Law
Satisfied Customers: 311
Experience:  I have 14+ years of experience as a family lawyer, advising people on all kinds of relationship and family law issues.
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If I sign a property to my son to register in his name will

Customer Question

If I sign a property to my son to register in his name will I have a problem with tax or anything else? If he signs it back to me at a later date is there a problem with tax or anything else?  The property is mind left by my late father however I am soon to go through a divorce and want to be sure I protect my son's inheritance, however post divorce I will need the property to be signed back to me which my son is of course agreeable to do. I assume if it is registered in his name my spouse cannot make a claim against is as an asset as part of the settlement - is that correct.


Will I attract any issues with land registry or tax or anyone else if we transfer to son and then back to me a year or so later?

Submitted: 3 years ago.
Category: Law
Expert:  ExperiencedLawyer replied 3 years ago.
Hello,

My name is XXXXX XXXXX I will be able to help you with your question.

There are several issues relating to the scenario you raise but first:

- if you were to sell the property now, would you have to pay any capital gains tax?

- how old is your son?

- when do you expect divorce proceedings to start? Are you already separated?

.
Customer: replied 3 years ago.
I am not sure whether I would have to pay capital gains tax I am currently unemployed in full time education. My son is 25. My spouse left the marital home a couple of weeks ago but no formal proceedings have started. My son is not the son of my spouse. We have. I children together.
Customer: replied 3 years ago.
somebody advised it may be best to put it in trust for him and that would overcome my issues is that a better solution? If so how would I go about getting the property back from him if I needed it?
Expert:  ExperiencedLawyer replied 3 years ago.

Hello,

Gifting a property to your son or into a trust will be a chargeable event for CGT, which will mean that you pay CGT at that point - if there is any to pay. Obviously, I am not an accountant so do not calculate CGT, but in basic terms tax would be payable if the property had risen significantly in value since the date that you received it.

If your son later gifted the property back to you, then that would again be a chargeable event for CGT, although there would only be tax to pay if the property had significantly risen in value from after the time that HE received it.

In order to effectively get rid of the property for the time of the divorce, you would have to have disposed of it (perhaps by gift) in a way that did not make the court decide that you had only done it to reduce your exposure on divorce. The court has the power to go back several years and reverse transactions done in that way. So there is a danger there.

Whether you gift the property or put it in a trust, you will only be able to get the property back if your son cooperates with you at the time of return, and voluntarily returns it. If you have properly passed it to him (and therefore it is not taken to be your asset in the divorce), then it will be up to him (and possibly trustees on his behalf) whether it was ever gifted back to you. You cannot get rid of it effectively in divorce, in a way that guarantees you get it back later.

Of course, each time the property title is transferred, there will also by HM Land Registry fees etc to pay.

If you have not had the property a long time, then a better course might be to retain it, but argue in the divorce proceedings that it is inherited wealth and shouldn't be divided like the other assets. If you have held it for a few years or more, then there is little that you can do.

I'm sorry not to be the bearer of better news, but I would rather be honest than give you false hope.

I hope that is helpful. If you would like me to clarify anything, please ask. If not, I would be grateful if you could rate my answer.

Regards,
Mac.

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