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F E Smith
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Category: Law
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Experience:  I have been practising for 30 years.
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I live in my uncles property which he owns & has £47,000

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I live in my uncles property which he owns & has £47,000 left on the mortgage. He wants to pay the rest of the mortgage off, make the house freehold & then gift the house to me as he owed my father money, but my father is no longer with us. Is this possible please?
Also, if he was to just sell this house off & pay the money to me, with which in turn I would buy a new house, would this cause problems or is it as simple as just paying the money to the new owner & taking over the new house? Thanks.
Submitted: 11 months ago.
Category: Law
Expert:  F E Smith replied 11 months ago.

I think you mean, make the house mortgage free rather than make it freehold.

Please confirm if I have that wrong.

Your uncle can do what he likes with the house, transfer it to you and let you do what you like with it sell it, remortgage it, live in it whatever or, he can sell it and just give you the money.

If he owed your father money, that money now belongs to the father’s estate and if there are other beneficiaries, they are entitled to a share of that money so providing there are no other beneficiaries, what is being proposed is not a problem.

If your uncle’s total estate, if he were to die, is over £325,000, and he does not live seven years after transferring the property to you, there may be some inheritance tax to pay on a sliding scale downwards, depending on when he dies.

Can I clarify anything else for you?

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We can still exchange emails.

Best wishes.


Customer: replied 11 months ago.
Thanks for your answer, but I'm not sure between the difference between mortgage free & freehold. But the issue in finding is that I have been told that this will cause a problem for my uncle with regards ***** ***** government asking why he's giving so much money or a whole property to me without them acknowledging this is a debt. Also, I'm only part time work & just finished studying so will this much money or the house being transferred into my name after the rest of the mortgage being paid off cause me a problem from the tax office questioning where all that money or a whole property has come into my possession?
Thanks in advance for your reply.
Expert:  F E Smith replied 11 months ago.

Freehold is nothing to do with whether there is a mortgage or not. There are 2 types of property, freehold and leasehold. Freehold, you own it forever, leasehold you own it for a number of years, 5 10, 99, 999.

Flats are always99.99% of the time leasehold. Houses are freehold 99% of the time.

The government won’t make any queries whatsoever in respect of this. They won’t get involved. It will become a problem if he transfers the property and he then goes bankrupt because the trustee in bankruptcy will want to know why he transferred the property and its likely the trustee in bankruptcy would apply to court to set the transfer aside unless it had already been done for 5 years at the time he went bankrupt.

If your uncle is paying the mortgage off, it seems unlikely he is about to go bankrupt!

Parents and relatives routinely transfer properties to children so I cannot see any problem with this. If your uncle has other children himself, they may query why he has done this.

Other than that, nothing you say causes concern.

Customer: replied 11 months ago.
Many thanks again for your reply. This is exactly what I needed to hear! Yeah I don't think he's going bankrupt any time soon either! It was really just to make sure that neither of us face any barriers from the government or tax office questioning us! Just the final questions sorry if u don't mind, My mum is on benefits too, is this going to cause any problems to this? Can there be multiple owners to this house, so me & my brother for example? & just as a final confirmation, once the house is freehold & my uncles paid it off, he will just transfer into my name, & it's just as easy as that? Obviously legal paperwork etc is expected but other than that, it's really just a case of transferring over?
Many thanks again & I promise this will be the last question!
Expert:  F E Smith replied 11 months ago.

This is nothing to do with freehold. You are not changing to freehold. You are changing to mortgage free.

It would cause a problem for your mother if her name was on the property but there is no reason why you cannot own it with your brother

Yes, it really is just a case of transferring the property from his name yours, once the mortgage has been repaid.

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