Deed of Trust/CGT/Re-mortgage
Tax Planning and Financial

2 Thanks
2 Posts
13 years ago
Hi there,

I'm reliatively new to the forum and this is my 1st question, so please be gentle.

Hopefully I'm not the first investor to have been in this situation...

My business partner and I are currently drawing up a deed of trust for a property we purchased last year in his name. The property was refurbished and we decided that it will become mine (he kept another property we bought earlier so this was to even things out). I didn't qualify for a mortgage at the time, hence the mortgage on his name. I paid him back his share of all purchase and refurbishment costs, so effectively the property is 100% mine, in contrast to what is stated on the mortgage and trust deeds (hence drawing up the deed of trust)

The plan would be to re-mortgage and transfer the property at some point in the future onto my name. I also want to do this as soon as possible as I don't feel comfortable keeping the mortgage on his name, and he feels the same.

I have the following questions:

1) Will I be able to use the equity in the current property towards a mortgage - i.e. will the new lender recognise that the equity belongs to me as per the deed of trust, and more importantly, will I be able to use the equity as my deposit?

2) I appreciate there will be stamp duty payable on transfer, but will there be a capital gains tax liability to either my business partner or myself when I take ownership? The deed of trust states clearly that any tax/CGT liability will be mine, and I would be happy to pay it when I dispose of the property, but not when we transfer it from his name to mine. Could someone knowledgable please clarify? I currently rent the property out and receive all rents. I also pay the mortgage.

3) for all intends and purposes the property belongs to me, will this be recognised by HMRC as and when required?

Thanks in advance for any responses!

Best regards,

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