In 2007, my father and mother purchased an investment property for £198,000 with a £60,000 deposit. In 2015, my father transferred the mortgage and title deeds into my name and left my mother on them. No money was exchanged when it was transferred, and it is currently being rented out. The market value of the property is £300,000, but we are not planning to sell it yet. Are there any tax implications or fees that will be due and if so, when may that be?
Arthur Weller replies:
From what you have written, it appears that you are a joint owner together with your mother. If so, half the rental income is yours, and you should be declaring this annually to HMRC. If the mortgage is also joint, then both you and your mother can claim half the annual interest against your rental income (calculating the mortgage interest relief under the rules introduced from April 2017). As and when the property is eventually sold, you will receive half of the sale proceeds. Your base cost for the capital gains tax computation will be the value of half of the house in 2015 when it was given to you.