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transfer of equity question

(15 Posts)
designSalmon Mon 29-May-17 22:16:16

Really hoping for some impartial legal advice on here!!

I have a property which I own solely with no mortgage. I'm looking to transfer a 25 % share to my dad for no consideration. I was going to complete this process myself but following some advice on this forum and given some added complications regarding management company consent, I decided to use a solicitor.

My question is regarding panel 10 of the land registry tr1 form. My dad and I will be holding the property 25:75 as tenants in common. My solicitor is advising me that the third box needs to be ticked and since we hold unequal ahares, she will need to draft a separate declaration of trust document, which costs 300 pounds!!! I have absolutely no concerns re disputes with my dad over respective shares and most importantly, I'm looking to transfer him another 25 percent share next April so we will end up with equal shares!!

Therefore could someone knowledgeable in this area please tell me if I absolutely need a declaration of trust document drawn up? It seems unnecessary and a waste of money given the circumstances... if I don't NEED one, where can I record the simple split, in panel 10 or a separate land registry form??

Thanks in advance!

Spickle Tue 30-May-17 07:43:35

I'm not an expert but I think you can put the split as 75/25 on the TR1, however the title deeds will not show the percentage owned by each of you, so if you come to sell at a later date you would have no proof of the percentage, only that the property is held in unequal shares. I don't think Land Registry keep the TR1 once the transfer of equity is finalised, but perhaps someone more knowledgeable can advise. I'm not sure if increasing your father's share in six months to 50% is sensible since you would be payable solicitor fees all over again.

RedHelenB Tue 30-May-17 08:22:17

Yes why not just do the 50% now?

designSalmon Tue 30-May-17 09:56:40

Ok thanks, because I need to pay capital gains tax on each transfer and the tax liability saving is much more than extra legal fees if we split the transfers, since there is a 11k allowance each tax year on capital gains..hope that makes sense?

JanetBrown2015 Tue 30-May-17 11:13:49

Design I am not familir with the forms but the views above seem right to me. However you dont' have to use a solicitor to draft the trust (although it is wise). You could try to draw it up yourself. Try to find some examples on line or ask your solicitor to send you an example without liability that you can use as a base and try and do it yourself. £300 is not a lot - it is about 1 - 2 hours of their time and if they cock it up you can sue them for whatever your loss is but you certainly could try to draw up the trust yourself. Remember it might need to be produced to HMRC on deaths etc so make sure it is all very clear and signed as a deed by each of you in front of a witness etc.

Usually parents are transferring to children to reduce inheritance tax. Why are you giving your father a 25% interest in the house? Which of you lives in the house if any? Are either of you married - if you are then on divorce your other halves might come after your shares so again the clear trust document will help protect that 75% or 25% share.

worridmum Tue 30-May-17 14:35:04

Just be careful the courts can reverse this if this is to avoid paying out in a divorce case.

Movingin2017 Wed 31-May-17 07:36:58

You should definitely do a deed of trust. Particularly if you are trying to protect the share from third parties.

£300 is cheap.

prh47bridge Wed 31-May-17 09:52:42

A deed of trust will not help if the OP is trying to avoid paying out in a divorce. The courts can simply set aside the transaction.

usernamealreadytaken Wed 31-May-17 10:44:50

Good tax planning. AKA tax avoidance. Good to know you'll minimise your CGT rather than contributing to public services.

titchy Wed 31-May-17 15:51:11

What's wrong with tax avoidance? No one has a moral obligation to pay any more than the state-determined amount of tax. If the state deems it not enough the state has plenty of power to increase its tax income.

usernamealreadytaken Wed 31-May-17 16:22:41

Nobody has a moral obligation - do you own Starbucks? They're good at minimising their liability too.

titchy Wed 31-May-17 16:33:49

There's a bit of a difference between one person and Starbucks hmm

usernamealreadytaken Wed 31-May-17 19:08:48

But just imagine how much our public services could be improved by every "just one person".

titchy Wed 31-May-17 21:18:39

It's hardly proportionate is it?

Starbucks is a global corporation with a corporate moral responsibility commensurate with their size - so that means they should have a moral obligation above and beyond that required legally to the state within which they operate.

I am a tiny little person and owe the state nothing beyond that which I am legally bound. However as just one person I do have a moral responsibility on the same scale as the sphere within which I operate - so to a small community.

titchy Wed 31-May-17 21:20:33

Basically big money on a global scale = big responsibility on a country-wide scale. Little money within a small local scale = small responsibility on a local scale.

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