Mortgage advice

[fabian]

Hi,
I live in my father?s house, which in reality is mine, but in his name. Due to there being a high buy-to-let interest rate on the house, would it be more beneficial to put the house in my name, pay my fathers capital gains costs and any other fees and obtain a lower interest rate, or leave as it is???
Thank you
Fabian

 

[harrison]

Hi Fabian,
I presume your Dad lived in the house at some point, in which case you calculate the profit (sale price less purchase price) less costs in buying and selling. This is the chargeable gain. Tapering relief depending how long he has owned the property reduces this. You then calculate the percentage of the reduced gain he has to pay tax on. This is the number of whole years he lived in it plus 3 years divided by the total time owed. So if he's owned it for 10 years, lived in it for 2, he doesn't pay tax on (3+2)/10 i.e. half the gain. You also get CGT exemption of ?8,800.
Keep in touch
Harrison