My parents' home is partly in my name, but I want to make sure my siblings get equal share of the property when my mother dies
Q Twenty-seven years ago, when I was 13 or 14, my mother and father bought their council house. My elder siblings had left home by then and had bought their own homes and had their own families. My father and mother put the house in our (father, mother and myself) three names, although I was paying rent from the age of 16 until 30. At the time my siblings gave permission to put the house in my name.
However, I eventually bought my own house (aged 30ish) and lived in it for 11 years. I remortgaged it four years ago and bought another house in which I now live. I now rent my first home out but not for a profit, just making the repayment fees. I have now been told that I should pay tax on the rent, but I don't earn profit. I was happy making my mortgage payments and having a reliable tenant. In the meantime, the rented house has devalued and so has the home I live in.
Also, it has always been my intention to sell my rented house after the death of both my parents and buy my siblings out of their share of our parents' home. Legally they have no 'official share' but morally they have just has much right to it has me. My father has already died and my mother is 87 so I presume she will die in the next few years, but I don't know what to do. Should I sell my rented house now (although the price has dropped considerably) or should I wait until after my mother dies, when I could be liable for heavy tax implications because on paper I have three properties? My two houses are both valued at �60,000 leaving a drop of �30,000 each from when I bought them. My parents' house is worth roughly �100,000. CF
A First off, I think you should check the actual registered owners of your parents' house at the Land Registry. Although your parents may have wanted you to become a joint owner with them, this would not have been possible when you were a young teenager as children can not own property until they become adults at age 18.
Assuming that you are not legally a joint owner of your parents' house, the easiest way of making sure that you and your siblings all get a fair share of the property after your mother's death is to encourage her to make a will leaving the property to you and your siblings in equal shares. That way, they will have an official share and you can offer to buy them out after your mother's death.
Things could get a bit more complicated if it turns out that you do legally own a share of your parents' house. But a lot depends on whether you and your mother inherited your father's share of the property on his death or whether it all went to your mother. This should have been dealt with by a solicitor when your father died so it would be as well to check what the legal position is.
As far as the property you let goes, you should pay on any profit you make on the rent. If, however, you are not making a profit ? which you are not if the rent only covers the mortgage interest you pay ? than you don't have to worry about a tax bill.
When it comes to selling the property you rent out, there will be a tax bill only if you sell it for more than you paid for it. Also, your mother's death has no impact on the tax position of the let property and nor will the fact that you have three properties necessarily have heavy tax implications. When your mother dies, what will be taken into account for the purposes of inheritance tax is the value of what your mother owned and given that this seems to fall well within the nil-rate band for inheritance tax of �325,000 (in the 2011-12 tax year), there should be no tax to pay.
Source: http://www.guardian.co.uk/money/2011/jul/27/how-to-split-up-family-property
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