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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17210
Experience:  International tax
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I am a UK expat, residing in Netherlands purposes.

Customer Question

I am a UK expat, residing in Netherlands for tax purposes. In 2013 I was residing in Dubai and wanted to buy a GBP125K Buy to Let Property. Because i couldnt get a mortgage my father took it out and I gave him the money. I am now ready to pay off the remaining GBP52k and plan to give the money to my father, he will pay it off and then transfer the deeds of the house to me (technically a gift?). What are the tax implications here? He is 62 years old and I am 34.
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
HelloNo this would be a sell your father would report. You are buying the property for the original cost.If he sells to you for the same as cost then he would not have a gain to report. This is not a gift though os your father needs to report it as a sell.
Customer: replied 2 years ago.
Thanks Robin, Ive never used this service before , but was expecting a more in depth answer, can you qualify this? What is the most cost effective way for me to 'purchase' this from him (without agents), it is also under GBP125k so there would be no stamp duty i hope? By the way, all the cash I have gifted to my father to date for the property (GBP43k), what actually happens with these cash movements, were they / are they taxable upon any sale?
Expert:  TaxRobin replied 2 years ago.
The amount you have already given your father should be included as payments to purchase. The current SDLT threshold is £125,000 for residential properties so no SDLT should be applied.Transferring without agents is really outside the scope of tax advise.Your father is disposing of this property as a sale, you are buying it from him. Disposing of an asset includes:selling itgiving it away as a gift, or transferring it to someone elseswapping it for something elsegetting compensation for it - like an insurance payout if it’s been lost or destroyedThis disposal is not a gift as your father borrowed to acquire the property. You are purchasing it from him.You have been purchasing it from him beginning with the first payment you made to him.Your father is not selling for more than his cost so he would not have CGT to pay.
Customer: replied 2 years ago.
Hi Robin, I need some time to digest this information before I can provide a rating as I may have additional questions. Please can I reply here after the weekend on this same topic?
Expert:  TaxRobin replied 2 years ago.
You may come back anytime. The session is not erased
Customer: replied 2 years ago.
Hi Tax Robin,I have inquired at a few solicitors that might be able to help me they saidRichard,I note your comments. A gift between blood relatives is one way of transferring a property from one sole owner to another. However, this can only be done where there is no mortgage on the property.It might be best to redeem the mortgage and then transfer the property. With the mortgage on the property, the property can only be transferred by way of sale and your father will then need to instruct a different firm of solicitors to represent him.What are the implications of this - the gift approach - I noted in your previous message contrary advice regarding a 'gift'
Expert:  TaxRobin replied 2 years ago.
Your father is paying off the mortgage with money you are giving him. You are trying to do too many gifts between the two of you.This is a sale from my understanding. Which appears to be the same as the solicitor you spoke to thinks the same.
Customer: replied 2 years ago.
Robin ,Just to understand the consensus on possible direction , do you also think it would be wise for me to give my father 52,000 cash - he uses that to close the mortgage. After this is done, my father is 100% owner. I then structure this a ''sale'' through a solicitor, enabling me to transfer the property into my name . even though there is no further cashflow?Just chekcing, i cant be penalised for this kind of approach?Richard
Expert:  TaxRobin replied 2 years ago.
Yes, you can do that. I do not know what you mean by penalized.
Customer: replied 2 years ago.
Penalised, in that I might be some point taxed on it in the future as it being perceived as a taxable gift from my father by the tax man even though I have paid myself prior to the 'sale ' date?
Expert:  TaxRobin replied 2 years ago.
As long as your father survived for 7 years after the transfer then no you would not be taxed.Seven years would mean the amount would not be added to your father's estate.