I have been instructed to prepare a simple WIll for my client, effectively leaving everything he has between his adult children.
However, he bought his house for cash about 8 years ago, but for reasons that are not clear, he put it in his son’s name. His son does not live there and acknowledges that the house belongs to his father.
I am concerned that on his death the house will not be treated as part of his estate - he has already considered transferring the house into his name (son agrees) but is concerned about SDLT and CGT.
I am not sure how this will apply and any help is very welcome!
Transferring the title from son to father, for no consideration, will mean no SDLT charge (assuming no mortgage from the information provided).
There will be a CGT charge based on the uplift from purchase, less any relevant expenses. The son cannot get any Principal Private Residence (PPR) relief if not lived there. Father would get PPR on future sale.
IHT - the property may currently be outside of Father’s Estate (subject to below). Son gifting to Father will be a PET and normal 7 year rules apply.
Question whether a gift with reservation in the first place…if Father paid cash and put in Son’s name, is it a trust situation - which means that it would revert to Father’s Estate? Another mind maybe able to comment on this.
Do a declaration of trust setting out the facts with the son confirming he holds the property on bare trusts for the father and has always done so. Include in the deed a direction from the father for the house accordingly to be transferred into his name.
The TR1 will be for nil consideration, expressed as being made pursuant to the deed and the direction contained in it. So no CGT or SDLT.
I should add that you need to be satisfied no gift was ever intended, and check the transfer and with the solicitors who acted at the time to check out their instructions, to make sure it squares with what you are being told-ie that son has never owned it beneficially