giftingmortgage property

[halfax]

i want to part gift a house i own with my wife the value you is 200000. we have a loan for 80000 thebank will let us add our son to it . we each want to gift 10%
i will have to pay a small amount of capital gains. will i have to pay any stamp duty

[jpkeates]

If you're adding your son to the mortgage, you're not gifting him anything.
He's paying for his 10% (or 20%?) by taking on the full mortgage liability.

If you are all tenants in common and joint mortgagees, his share of the property won't secure his liability.
I don't understand why the lender is happy with that, but there you are.

[AndrewDod]

Is this your own home?
Who will get the rents afterwards or live there? - even if this were a gift, gifts with reservation of benefit are a different animal in terms of inheritance tax.

You are gifting 1/10th of 120K. There is no stamp duty on gifts. However the gift of mortgage liability changes the position, albeit it may be below the threshold for SDLT.

I don't see any reason the mortgage company would be unhappy depending on the status of the son.

[halfax]

first thanks to both of you for taking time to reply;
i cannot add my son to the deed , without adding him to the mortgage,the lender insists on it
the house is rented and we will split the rents 40-40-20.
it is just the stamp duty i was unsure of

[jpkeates]

The lender probably doesn't have an issue with the current arrangement as either they haven't noticed that the ownership is in common, not joint or make an exception for married couples, or are happy that each 50% share exceeds each individual's liability.

If the property will be owned 40:40:20 as tenants in common, the son's (worst case) liability for the mortgage is £80,000 and their security for the mortgage would be worth £40,000.
That's where I think the lender may have an issue.
If the ownership was as joint tenants, the lender probably wouldn't have the same issue.

If the two parents die, they could will their 80% to the cats home, leaving the son as the sole mortgagee with a liability exceeding the value of the mortgage security. Lenders have teams of people who's job it is to make that impossible.

For tax purposes, HMRC should assume that the proportion of the mortgage as consideration is 20%, which would be £16,000.
If the son doesn't own a property that would be within the 0% stamp duty band..
If they do, it wouldn't be due the 3% stamp duty surcharge as it's below £40k.

However, it's something you may want to discuss with your son in some detail (or even get specialist advice).
If the son has a part share in a property (as their only property) it means that any future purchases they make will be subject to the 3% additional property stamp duty surcharge for that purchase.
Which could end up taking away a lot of the value of the gift or even exceed it.