Property sales/Capital Gains Tax/Title deeds

Assuming you're restricting the scope of the question to be in respect of the sale of property A, the answer is no, provided that when you say it was your main residence from 4/99, you also mean that that is also when you acquired ownership of it.

You mean A, not B, I take it. If you sell it within 3 years of it ceasing to be your main residence, there will be no tax to pay, unless they change the rules. The period might be a little longer depending on whether you rent it out, and what use you can make of taper relief and personal allowances.

Of course it's allowed, but there are implications. If your brother does not use it as his residence, he may be liable to increased CGT in due course as a result of a lower acquisition cost relative to whatever he will sell it for later on.

Alternatively, for IHT purposes, if you die within 7 years, this could count as a gift of £116,000.

Probably not. But you won't need to hire an estate agent to market the property, but you will almost certainly need some legal help with the actual conveyance. Presumably your brother doesn't have the £84,000 in cash, and would need to apply for a mortgage loan in his own name. Otherwise, he could give you the money as a loan, you'd use it to pay off the mortgage, and then you could sell him the house in return for forgiving the loan.

Pretty uncoventional either way, just to save a few fees. And don't forget Stamp Duty.

In message , Kit writes

If it is just a straight sale and purchase of your main residence, then the transaction is exempt from CGT. If, however, you have not been living in property A for a while, then you may be liable for some CGT on it for the period since it was your main residence.

You can sell a property to anyone for any price. However, two points you need to be aware of. First, for CGT purposes, the relevant figure is the value of the property, not the disposal price. Secondly, if you were to go bankrupt within the next five years, your trustee in bankruptcy could set aside this transaction in order to recover the extra £116,000 for your creditors.

Probably not because there is the mortgage to sort out.

Yes - a transfer made at market value for consideration of " natural love and affection" - there is no need to buy and sell which might possibly incur stamp duty for your brother - it would need to be verified that stamp duty is exempt for transfers of equity.

Yours faithfully,

John Aidiniantz

Is there any way I could just transfer the mortgage for property A over to my brother thus avoiding all the lengthy process of mortgage application etc... And/or can I arrange for the house to not be under my name, instead under my brother's name altogether and he can pay me money for the mortgage amounts monthly? Can a solicitor do that for me?

I'm looking at ways of making the whole process faster, avoiding pricey mortgage lender's fees and solicitors fees.

Cheers.

Not as a rule, but you could always approach the existing lenders and sound them out. It *might* save a bit of time, but on the other hand because it's nonstandrad it might not sit well with their set procedures so might take longer even though it seems easier. But it isn't. The basic lending decision depends on the prospective mortgagor (the owner/borrower) being deemed a good risk, so a credit check will have to be done on your brother. It also depends on the house being suitable security. If the total borrowing is not being increased, it *may* be possible to dispense with another valuation, but it's unlikely.

Also, a mortgage can't simply be transferred. You as owner have given your lender a mortgage (the right to repossess and to block a sale). Your mortgage will be useless to the lender if you cease to be the owner, so they will need a new mortgage from your brother.

As a rule the process of mortgage application is not lengthy, and is easily absorbed within the time the rest of the deal takes.

The title cannot be transferred without the mortgagee's consent. Your lender may agree to give that consent, but will probably require at least two solicitors to be involved, one representing you, one your brother, and perhaps another them.

Why? If time is a problem, why don't you just rent him the place while the wheels of title transfer are grinding away?

I don't understand. Here you are, contemplating giving away

In message , Kit writes

Is there more to this than meets the eye?

You are worried about solicitors and lenders fees, yet you are giving your brother a £200K house for £84K.

You also want it to happen fast. For what reason?

Your lender has granted you a mortgage based on the security of the property, which is in your name.

For your brother to get a mortgage, they would require the property to be in his name, and for the mortgage to be based upon the security of the property which must then be in his name.

So you cant get away from the fact that your brother needs to get a mortgage in his own right, and the property needs to be conveyed to him.

So you have little choice but for him to get a mortgage, and for each of you to use a solicitor to manage the conveyance and the mortgage.

Why not just get on with it. It might cost about a grand, and take about

In message , Richard Miller writes

Good point. Possibly very relevant given the nature of the query??

"Richard Faulkner" wrote

Hmmm - never heard of this before - seems quite alarming!!

Say I bought a house 3 years ago, and managed to negotiate a 20K discount to asking price. If the vendor becomes bankrupt in the next 2 years, you are saying that it is possible for the (3-year old) sale to be voided? So I am left with my mortgage to pay, and no house to sell? Am I a squatter?

Another scenario springs to mind:

What if I sold the house before the 5 years is up, and then the person I had bought off goes bankrupt? Does the new owner now have to relinquish the house? Are there any implications on me?

Moral: Should we always consider the financial status of a vendor when deciding to buy a house, at anything under asking price??

In message , Tim writes

Not really, it is just a reasonable way to avoid people disposing of their assets in order to defraud their creditors.

It only applies to transactions at an "undervalue", in other words where the market value is one thing and the price paid is substantially less. If you have simply negotiated a lower price in an ordinary arms-length transaction you have nothing to worry about.

Yes. Which could cause problems in the event that the OP's brother comes to sell the house within that timeframe.

Not under asking price, no. It only applies where there is a transaction for a lower value than the market price. By definition, transactions involving close friends and family will be viewed suspiciously, those with strangers at arms length are unlikely to be analysed at all.

"Richard Miller" wrote

...

Ah, but who determines "undervalue" / "market price"?? Is there a level at which a large "discount" which was negotiated (in an ordinary arms-length deal) may lead to the bankruptcy issue you describe?

What happens if a "soon-to-be" bankrupt, with a 200K house, who knows bankruptcy is imminent & wishes to spite his/her creditors, sells the 200K house for 50K to a totally independent person??

In message , Tim writes

Then it wouldnt have been a £200k house, just a £50k house.

If he DID sell the house for £50k then it wouldnt be hard to understand why he went bankrupt!

Having said that, the underlying principle is 'did the bankrupt act in such a way as to deprive his creditors, (and possibly also act to his own benefit?). If so then the trustee could invalidate the sale.

"Richard Miller" wrote

then... "john boyle" wrote

invalidate the sale.

So - if the bankrupt has agreed to a hefty discount when selling his house (ie he *did* "act in such a way as to deprive his creditors"), even though it's an "arms-length" transaction (where Richard mentioned the purchaser would have "nothing to worry about") - the trustee could still invalidate the sale.

As I said before, this is quite alarming!!

In message , Tim writes

Not at all, it gives comfort to the creditors who would find such a sale as being quite alarming.

In message , Tim writes

Not really.

From the seller's perspective, if you are trying to stop your creditors getting all they could, you are potentially in difficulties. From the buyer's perspective, if it looks too good to be true, it probably is.

This is why when there is some element of gift or undervalue, the transferee's solicitors will often require a declaration of solvency.

"Richard Miller" wrote

I beg to differ. It must be very common for people to negotiate a 5-10% discount off a house's asking price. Isn't it?

"Richard Miller" wrote

With each of the last two houses I bought, I negotiated a discount of around

In message , Tim writes

No. As I keep pointing out, those are standard arms-length business transactions. They are not sales at an undervalue.

"Richard Miller" wrote

Thanks very much for your input, Richard.

I'm now just trying to reconcile the two (apparently) differing views from yourself and John:

"john boyle" wrote

This would suggest that accepting a discount to asking price (which would therefore "deprive his creditors"), could lead to the trustee invalidating the sale.

Are you saying that John's statement is incorrect?

In message , Tim writes

I would say he is not.

Agreeing to a price that is 10% less than the asking price isnt a 'discount', its just straight forward negotiating to establish a market price.

Dont take this the wrong way Tim but arent you just being a bit argumentative for the sake of it here? Surely you can see that RM and I are saying the same thing?

In message , Tim writes

No. I am saying that a commercially negotiated transaction at less than the original asking price is standard business. It is not a transaction at an undervalue such that the creditors are deprived.

Frankly this is never an issue in real life scenarios. Either a transaction is a normal commercial business transaction or it is not, and it is pretty damned obvious which side of the line it falls.