Removing parent from title?

[zamaz]

Hi all

My husband bought a property (currently our home) with his father before I met him. He now wants to remove his father from the title (no need to put me on there), as we want to turn it into a rental property. His father was there in name only, and has made no financial input. As far as we know they are tenants in common. Does this incur stamp duty? Also what is the situation with regard to his fathers entitlements to the property - they had no %age agreement, but records can show that the father had no financial input. If we sold it - is his father entitled to half?

Hope someone knows the answers - thats just the first of our mixed bag of problems!

 

[zamaz]

Refinancing to avoid CGT

I've been surfing around the forum and have started to answer my own questions - now have realised that if my father-in-law comes off the property he will also be liable for CGT.
My question is - is it possible to refinance 100% so when he "sells" his half to my husband, there is no profit due to it being 100% mortgaged. This would (I think) be achievable because we have an IP with $130k mortgage - actual value of IP around $175-185k. The PPOR (property in question) has $129k mortgage and valued at $200k. So PPOR would be 100% financed and IP down to about $59k.
Also - I presume my husband would be liable for stamp duty as he is "purchasing" from his father - would that be payable on whole property or just half?

This forum is great-I love getting help without having to use the telephone!

 

[asy]

Hiya Zamaz!

Talk to your solicitor and see if you can have his father gift him the property, with luck you may get away without having to pay.

At worst you will be up for 50% stamp duty.

If you sell, technically, his father is 'entitled' legally to whatever percentage he owns of the property, but this only becomes a problem is there is animosity and the father insists on that amount (In any case, you may be able to challenge it if you can prove that there was no input). If there is no animosity, and the father is agreeable, you just keep the lot.

This is why joint titles with family must be very carefully considered! hehe

hope this helps.

asy

 

[Terry_w]

Hi all

My husband bought a property (currently our home) with his father before I met him. He now wants to remove his father from the title (no need to put me on there), as we want to turn it into a rental property. His father was there in name only, and has made no financial input. As far as we know they are tenants in common. Does this incur stamp duty? Also what is the situation with regard to his fathers entitlements to the property - they had no %age agreement, but records can show that the father had no financial input. If we sold it - is his father entitled to half?

Hope someone knows the answers - thats just the first of our mixed bag of problems!

Yes dad will be up for stamp duty and CGT on the market value of the property part transferred. Husband will need to borrow to buy dad out otherwise the loan interest will not be deductible.

There may be a slim chance husband could argue that Dad is trustee for him and thereby stamp duty and CGT avoided but this may be hard to prove.

Dad may also just want to remain owner and leave it to son in will.