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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 11753
Experience:  30 years as a practising solicitor.
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Upon the death of my father in 2000 my brother and I set up

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Upon the death of my father in 2000 my brother and I set up a trust with a firm of solicitors which enabled me, as an unmarried man, to buy into half of the family estate through an arrangement of gifting and paid rent as I'd been living at the property for many years. This month the family home will be sold and my mother will be moving to a small flat. As I now own half of the estate my name will have to go on the deeds of this property. I was wondering what the implications of this will be on my future whilst my mother is alive. I'll be looking to buy a property of mine own in the future, are there any negative legal/tax issues to consider as part owner of my mothers flat?
Thanks. Paul
Submitted: 1 year ago.
Category: Law
Expert:  JGM replied 1 year ago.

For clarification have you been living in the house throughout?

Customer: replied 1 year ago.
for 44 years. I believe part of the trust arrangement back dated some of the 'gifting' and rent. I have currently been renting for approx. 6 months, but I'm still registered as living at the family home. When the property is sold (380K) I will own a half share, although a payment of £9800 to her will be outstanding to complete the loan agreement. I may be rather paranoid here but it occurred to me I should check the implications of having my name on the deeds. Will I always have to register as living at the property, for example. I can't see any logical reason why I would.
Customer: replied 1 year ago.
Apologies, I just re-read my comments above - to clarify I have been living away from the estate property for the last 6 months
Expert:  JGM replied 1 year ago.

Given that you have lived in the property for all but the last six months, upon a sale of the property you will have no tax liability as the property was your residence and you will get private residence relief. When the property is sold, if you are an owner you will sign a title deed to the new owner. Happy to discuss further as I didn't quite follow that part of your narrative but I am going on the basis that your main concern is that you may have a tax liability in connection with your share of the property. Your residence should deal with that and from what you have described you would have no tax liability.

Customer: replied 1 year ago.
I guess I'm more concerned about whether they'll be any legal or tax restrictions on me in the future with regard to how the ownership was obtained through a trust. When the house sale goes through and I pay the outstanding £9800 to my mother I assume the trust will effectively come to an end and I will become a 'normal' property owner? For example, I have no obligation to register myself as living at my mothers new property? Or this ownership wont have any adverse affect on my ability to get a mortgage in the future? Will it be considered as a 'buy to let', etc. I guess that's a question for a tax/mortgage adviser.
Expert:  JGM replied 1 year ago.

I can't think of any particular legal or tax restrictions. I presume at the point you would apply for a mortgage for yourself there would be no other borrowings in your name. If you buy a second property which is not replacing your main residence by way of the sale of your main residence, you may have to pay the stamp duty supplement.

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Customer: replied 1 year ago.
Ok. Thanks.
Customer: replied 1 year ago.
At this point I think I may consider loaning my half of the estate back to my mother so as to avoid any possible CGT and stamp duty. I'm assuming this would require some kind of legal agreement between the two of us - would this be a relatively simple/low cost procedure to implement?Thanks.
Expert:  JGM replied 1 year ago.

If you take ownership you will at that stage become liable for taxes. Loaning back to your mother won't help. You may want to consider not taking ownership and taking a security for your share which would make you a creditor rather than an owner. You would have to run the whole transaction past your own solicitor so as to get an opinion on the best way to structure this.

Customer: replied 1 year ago.
When you say "if you take ownership you will at that stage become liable for taxes" - do you mean ownership of my mothers new flat or the estate in general? Just to clarify, If I loan my half of the estate back to her why would I still be liable for taxes?
Expert:  JGM replied 1 year ago.

I hope we are not at cross purposes but can you clarify the series of transactions which has already occurred and which are yet to occur? What assets did you start with and what are you ending up with? It's when you started referring to loaning back to your mother that I've lost the thread a bit so clarification would be helpful.

Expert:  JGM replied 1 year ago.

I am going home now but will be back online later this evening.

Customer: replied 1 year ago.
In 2002 a trust was set up whereby I purchased half of the family property from my mother for £82,500 (of which £9,800 is currently outstanding). This year my mum decided to sell the house and downsize to a 2 bedroom flat. The house will sell for 380K and my mother will pay 275K for the new flat. As I am now virtually half owner of the estate (190K) the options are to split ownership of the new flat 65% and 35%, with 100K under the ownership of whoever has the 35% share. The plan is for the 100K leftover to go into a safe ISA.The alternative to me being on the deeds of the flat at all, and/or to take ownership of the 100K is to loan my entire share of the estate (190K) back to my mother.
Expert:  JGM replied 1 year ago.

Thank you. What does the trust own?

Customer: replied 1 year ago.
I'm not sure what you mean? I guess my brother and I have always referred to it as a trust when in fact it was probably no such thing. It was a legal agreement set up by my mothers' solicitor which enabled me to buy into the property through gifting and rent paid.
Expert:  JGM replied 1 year ago.

That is the crux of the matter. You have to clarify the chain of ownership from the death of your father onwards.

Customer: replied 1 year ago.
Ok. Thanks.
Expert:  JGM replied 1 year ago.

You're welcome. Please come back to me if you need further information. In the meantime please leave a positive rating so that I am credited for my time.

Customer: replied 1 year ago.
I thought I had earlier in the conversation? Unless I'm mistaken.
Expert:  JGM replied 1 year ago.

Sorry, it was further up the page. Thank you.