Blood Relative Relief

T

Taximan

Registered User
Messages
70
A friend recently informed me that he bought a large house and converted it into two houses. He then sold one of the houses to his sister (unmarried). He was advised and duly instructed his solicitor to take his wife’s name of the original deed before the sale went through to his sibling to enable his sister to avail of “consanguity relief” on stamp duty. The solicitor has stated he was unable to do this!. This has led to a substantial S.D liability to my friend. Has the solicitor acted in a negligent manner? Or can anyone come up with a good rationale for his inability to perform this task.

I queried the legitimacy of such an arrangement with a stamp duty specialist and she felt it was appropriate advice and good tax planning
 
I'm a bit confused here. The friend's sister would be liable to Stamp Duty, the friend would be liable for Capital Gains Tax on the sale of the property. Is this not the case?
 
Yes you are right in both instances, however the stamp duty between blood relatives is only half what it normally is. So the woman involved is now liable to 7.5% stamp instead of 3.75%.
 
Sorry thought you said in your original post that your friend (he) had been left with large stamp duty bill.

I can't see any reason why the solicitor could not do this given that property can be transferred freely between spouses. It would be different if your friend was asking the solicitor to do this after the fact, i.e. property had already been sold to sister.

Might it be something to do with the deed itself? I have a vague recollection of another thread on AAM stating that some banks will only agree to having the same names on the deed as those on the mortgage contract.
 
I think you need an explanation from the solicitor. He is the only one who can confirm the position.

I know in the past that I have cautioned spouses about the down side of these situations. Wife transfers investment property to husband so that husband can sell to family member who can avail of consanguinity relief. Husband pockets sale proceeds.

Would it have anything to do with a lending institution i.e. that their consent was necessary?

mf
 
dont understand why solicitor has advised against this. It is just efficient tax planning and had similar situation myself.

as for possible problem with husband pocketing proceeds from sale after transfer to his sole name ... if that happens the marriage has alot more problems than the monetary value which has been "pocketed" !
 
I personally think the solictor has a lot to answer here he has made a complete pigs ear of the situation. this was flagged to him almost 6 months in advance of the sale going through. I initially thought it was absentmindedness on his part. But he is related to the spouse on the origional deed so i now feel he was been overprotective to his relative. Is there any comeback for my friend she is now down 20K because of this.

Not sure about the lending institution imput here as their contract with the lender is the mortgage they keep the deeds as security. As one of the lenders is on the deed that should suffice.
 
A. Did spouse agree to come off the title?
B. Why did sister complete the purchase of property if title was still in the others joint names? Once she knew the property was still in joint names, presumably she could have pulled out.

"Not sure about the lending institution imput here as their contract with the lender is the mortgage they keep the deeds as security. As one of the lenders is on the deed that should suffice."
The point I am making is that if H and W own property and there is a mortgage, then they cannot sell or dispose of the property without the consent of the lender ( unless they are selling outsight and clearing the mortgage). So the property could not be (a) transferred to H and (b) transferred to sister without consent of lender unless H and W were at the same time remortgaging.

mf
 
Thanks for your response MF, and I take your points re lending Inst. I knew the answer to this querie before I posted it. " Don't mix family and Bus" invariably gets messy. Solic was acting for both sides so he had complete control and put it on long finger as prob did not expect to get paid so did not want anything difficult. this also means their is no come back for my friend can't see her suing her siblings in laws.
 
You must log in or register to reply here.
Back
Top