Property Succession to Children – me

Reply to the comment left by "Pam Thompson" at "14/10/2015 - 22:35":

@ Pam

It sounds as if the 20% charge is an inheritance tax (IHT) charge.

Usually a capital gift by a person would be subject to the lifetime rate of IHT. In most cases the person making the gift has their lifetime nil rate band, currently £325,000. As long as this limit is not breached then if the donor survives 7 years from the gift then it falls out of the inheritance tax charge and no tax is due.

If they have already made capital gifts of more than the £325,000 in the past 7 years then a lifetime tax charge of 20% is made on the amount over the limit. If they die within 7 years then an additional 20% could become due.

It sounds from what you were told that your mother had already made gifts in excess of the zero rate amount and hence the tax due.

@ Theo - just adding your name to the mortgage deed will not mean that you become a part owner of the property. For this to happen then you would either need to be added as an owner at the land registry or a you could become an owner by your parents executing a deed of trust stating that although the property is in their name they hold 33% (or other percentage) on your behalf.

Having become an owner you do not need to receive any share of the rental income. The owners can agree between themselves the share of the income. However I would notify HMRC of the agreed split of income. I would suggest Form 17 as your parents are involved as a husband and wife.

The transfer of a share of the property to you is a disposal by your parents and as you are a connected party the transfer would be at market value. Depending on the values CGT may be payable.

SDLT could also be an issue.

The type ownership also has a role to play.

If the property is owned as Joint Tenants then:
- you have equal rights to the whole property
- the property automatically goes to the other owners if you die
- you can’t pass on your ownership of the property in your will

If the property is owned as Tenants in Common then:

- you can own different shares of the property
- the property doesn’t automatically go to the other owners if you die
- you can pass on your share of the property in your will

You need to have informed the Land Registry of which type of ownership you have when registering the property but you can change it at any time.

At the end of the day you need to discuss with your parents what they actually want to happen and then take the appropriate advice as to your particular circumstances.

Hi All,

Thank you for your responses and sorry I didn't provide enough information. My parents are married and there is no will in place.

I am being added to the mortgage but also the deeds are being changed and my name will be added on land registry records so for the avoidance of doubt the land registry records will show my name and my parents names.

We don't expect to pay off the mortgages as they are interest only and the idea would be to simply re-mortgage at every timely opportunity. Given this, does this mean if my parents were to pass after 7 years that I could inherit the property avoiding IHT by simply re-mortgaging the property in my name.

I would appreciate if you could provide information of a specialist who could properly advise in this area.

Many Thanks in advance,

Theo.

No Theo the property will still form part of your parent's estate.

If you wish to talk to one of our P118 sponsor IFAs please drop me an email off line with all your personal contact details and I will get the best person to help you out. npatterson@property118.com