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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 32086
Experience:  Over 5 years in practice
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Hi, we own 9 properties with mortgages and want to pass on

Customer Question

Hi, we own 9 properties with mortgages and want to pass on part of the asset to our adult children. what is the best way to do this. My husband has cancer and wants to avoid the 7 year inheritence issue and the houses will need remortgaging in a few years.
Submitted: 4 years ago.
Category: Law
Expert:  joannem1965 replied 4 years ago.
are these interest only mortgages?
Will the children be able to take on the mortgages?
What equity is in the properties?
are they in joint names with you?
if not, why does he not simply transfer them into joint names with you?
Have you consulted the lenders about this?
Can we have the full background details please?
Customer: replied 4 years ago.

Hi - yes the mortgages are interest only.


In theory the children could take on the mortgages although some lenders were not happy as they had not had a mortgage prior to this venture.


Joint names currently with my husband and myself


currently own about 40%. 8 houses are BTL on AST with sound tenants. Houses purchase from 1997 to 2003 with our last one being our main home purchased in 2011.


Are you saying we could add our 2 children onto the deeds. If this is the case then doesnt a capital gain arise on the transfer?

The houses are all based in England.

Expert:  joannem1965 replied 4 years ago.
If your query is about capital gains, I will need to transfer this to UK tax because I do not know enough capital gains tax legislation to be able to answer other than to say that for the children’s tax purposes, the acquisition price with a value of their share at the time of acquisition.
You say that you are worried about inheritance tax in the initial question. If the properties are in joint names, there is no inheritance tax between husband and wife so when your husband eventually passed away, there will be no inheritance tax to pay.
The children cannot take over the properties or have them transferred into their names without taking on the liability of the mortgage and they cannot be transferred into joint names unless the lender agrees to add them to the mortgages. That may be a liability that the children do not want and the children may not be good enough for the lenders purposes. In that respect, would need to ask the lender but I would not expect a particularly positive response in the current economic market for buy to lets.
Can I assist further?