We have purchased our first property but, as I am over 70, we struggled to get a joint mortgage.
Instead, the home and the mortgage are in my son’s name alone. I believe this means that for tax purposes he will be the only one assessed when the property is sold.
Should we form a partnership to overcome this tax problem? If we do, how would the tax work?
Or can we change the property deeds now the mortgage is in place? I don’t want my son to be solely liable for tax on the property.
Jointly owned buy-to-let properties don’t qualify to form a partnership. As a result, the share of any profit or loss arising from the property normally falls in line with how much of the property you own.
So if you own 40% of a property, your share of the profits for income tax and capital gains tax purposes is calculated as 40%.
As you don’t currently own a share of the property, your son will be the one assessed for tax purposes on any gains.
In order to be viewed as a part-owner of the property, you would need to have your name on the deeds. However, it is likely that the mortgage lender’s agreement would be needed in order to do that.
Alternatively, you could have a deed drawn up that states that your son owns the property as a nominee for you.
For this to hold up to a challenge from HMRC, it needs to be legally binding and, again, have the agreement of the mortgage lender. I strongly advise that you speak to a solicitor.