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Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 33300
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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I want to transfer to my son, who is nearly 16 years old, the

Customer Question

I want to transfer to my son, who is nearly 16 years old, the whole or part of a property I own in London (worth about £850,000) which is currently rented out, in order to avoid future inheritance tax. How do I go about doing this? (There is still a mortgage of £124,000 on the property.) As I am non-resident in the UK, I am not (until April 2015) liable to pay capital gains tax.
Looking forward to hearing your advice,
Linda
Submitted: 1 year ago.
Category: Law
Expert:  Clare replied 1 year ago.
Hi
Thank you for your question.
My name is ***** ***** I will do my best to help you
I am afraid that your son is not old enough to own property - and in any event you cannot transfer the property when it is subject to the mortgage
Please ask if you need further details
Clare
Customer: replied 1 year ago.

Hi Clare,

Thank you for your answer, but what I am wondering is whether I could not, for example, set up a bare trust for him now? Also, would it not be possible to transfer a share, say 50% of the flat to him/the trust now, and get the approval of the mortgage company to keep the mortgage in my name? (The £124,000 mortgage would leave more than enough equity to still give the mortgage company a good loan to value ratio.) Or perhaps I could pay off the whole mortgage now, transfer the property into a bare

trust, and then remortgage? Looking forward to your suggestions, Gabriele

Expert:  Clare replied 1 year ago.
Hi
May I ask why you wish to do this now?
Clare
Customer: replied 1 year ago.

Hi, sure, the reason is that I own two properties and other assets, which in total are worth much more than the current inheritance tax threshold of 325,000 GBP. So if I was to die now or in the next seven years, my (only) son would face a very high inheritance tax bill, which I want to avoid for him. Whilst I am not that old (all relative, I guess :-) I've come close enough to these situations with other people that I don't want to take anything for granted, and I want to make sure not just that my son is provided for sufficiently for his education etc., but that as much as possible of the estate that I have built up over my whole working life goes to him and not the taxman ... Linda Gabriele T.

Expert:  Clare replied 1 year ago.
Hi
Could it wait two years?
Clare
Customer: replied 1 year ago.

Hi, I guess it could (I know it would be easier once he's 18) but I'd prefer not to risk waiting the extra time and do it asap now.... L-G

Customer: replied 1 year ago.

Hi Clare, I can't rate your service until you have actually answered my question, which is what can I do NOW to achieve my aims ... You have mainly answered with questions, i.e. why I want to do it, and why now etc. Regards, linda-g

Expert:  Clare replied 1 year ago.
Hi
My apologies for the delay.
You can indeed create a Trust to hold the property which would solve the problem however you would need the Consent of the Mortgage Company (unlikely) or you will have to pay off the mortgage in full.
It should be possible to raise a buy to let mortgage at that point given the low loan to value rate
If you were willing to wait for two years then you could transfer the property into the joint names of yourself and your son and back that up with a Declaration that he is entitled to 100% of the equity.
Coupled with the potential taper relief on the IHT this would minimise the risk - for only a two year wait.
Please ask if you need further details
Clare

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