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BTL , adding additional person

Hello

A father has a flat on a BTL mortgage. He is looking to add his son to the mortgage and give him 50% share of the property and rental income.

Flat Value is £300k, mortgage left £177k

What are the tax implications relating to CGT for such a scenario? 

Thanks in advance for your help.

Manzar

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It's Not Just The Mortgage

To effectively split the property for CGT purposes they need to hold it jointly as tenants in common - i.e. the title deed needs to be varied. Then you can organise the split in the ratio of your choice (50% being the default otherwise)*. Any solicitor should be able to sort this out for a few hundred quid.

* notifying HMRC on the relevant form (the form number escapes me right now.)

 

Thanks (1)

CGT is, basically, calculated on the difference between the market value on 50% share of the gifted property less 50% of total cost, with various additional rules depending on date of original purchase, etc. Detailed information on calculation, rates etc. is at:-
http://www.hmrc.gov.uk/cgt/index.htm
Assuming the clients do not wish to DIY, a solicitor will deal with the joint ownership and SDLT (probably none payable).

Thanks (1)