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Ask Your Own Question, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 4973
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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3 years ago we obtained a mortgage in our name on behalf of

Customer Question

3 years ago we obtained a mortgage in our name on behalf of my daughter and her husband who were having difficulties getting a mortgage as they were both self employed. The payment comes from our account but they pay the exact same amount into our account. We also loaned them the deposit. to purchase the house. They would now like to get their own mortgage, but I am unsure of the implications as this appears to be our home on paper and we would have to do a virtual sale of the house to them. Can you advise.
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: No
Submitted: 9 months ago.
Category: UK Tax
Expert: replied 9 months ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Expert: replied 9 months ago.

Thank you for your question..

Please advise if the property has gained in value over the three years and by how much?

Did you have any agreement in place between the parties that the beneficial owners of the property are your daughter and her husband?

Is the property in joint names with your wife?

Many thanks

Customer: replied 9 months ago.
We bought the propert for £220k. We loaned them £60k deposit. Although the house has probably gone up in value we will 'sell' to them for £160k which is the remainder of the current mortgage. The propert is in joint names with my husband. We don't have anything official to say the house was bought on behalf of Maria daughter and son in law.
Expert: replied 9 months ago.

Thank you for your prompt reply.

You may wish to sell the property to your daughter and son in law for £160k but as far as the tax man is concerned, the sale would be deemed at market value for capital gains tax purposes. If there is sale of property to connected person (daughter is a connected person) below market value then market value prevails. As this is a second property for you, the whole gain (after relief for for buying and selling costs and gains annual allowance) would be chargeable to CGT.

You may wish them to pay you an amount equivalent to outstanding mortgage, the balance would be deemed a gift to them and you should be aware of its implications for inheritance tax purposes. More information on this is covered here

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Expert: replied 9 months ago.

Hi there

Just checking if you are happy with the response or need further clarification.

Many thanks