CGT liability following transfer of equity

Good afternoon, Just looking for some advice please - My mother and I bought a house jointly in 2004, with both of us on the mortgage. It is an interest only mortgage. She very kindly helped me with a 36K deposit at the time, with the remainder covered by the mortgage. I have lived in the house until now with my wife, but my mother has never lived here (she essentially joined me on the mortgage, as I did not have the income to afford it on my own back then when I was young). She has never benefitted financially from being on the mortgage; I have paid it for entire duration. My wife and I now want to remortgage to a repayment mortgage, to allow us to stay in the property when our current term ends soon. My mother simply wants to relinquish her share. A transfer of equity is in progress, so that my mother no longer has any share in the property at all, and my wife will join me on the new mortgage. The new mortgage is for virtually the full outstanding balance of the old mortgage, apart from five thousand pounds that I paid off last year. Other than that one-off 5K payment, I have only ever paid off the interest each month. We believe the property value is about 120K more than when we bought it in 2004, based on recent estate agent valuations. Once the remortgage goes through, will my mother need to pay capital gains tax from effectively gifting her share of the property to us? If yes, how soon will she need to pay this, and what measures could she reasonably take to minimise what she needs to pay? Many thanks for any guidance anyone can offer here.

Hi Clarkson27,
There are no tax implications.
Although your mother is a legal owner of the property, she is not the beneficial owner of it.
When you return her capital to her, there is no tax to pay.
Capital gains tax is only chargeable when the property is being disposed of, which is not the case her.
Re-mortgaging is not the same as disposing.
Capital gains is chargeable against the beneficial owner, whenthey dispose of the property,which is you.
At is is your main residence, you have private residence relief (PRR) to set against any gain.
If the PRR covers the gain, there is no Capital Gains Tax.
Please have a look at the guidance at.
Thank you. 

Hi was she also on the deeds or just the mortgage? I have an almost identical situation but my mother is on the deeds too as they didn't do interest only guarantor mortgages. I'm hoping I can use this response for my transaction too. I know it's ok if just on mortgage but another hmrc admin confirmed there might be CGT payable in my case which is confusing as our scenarios are the same .

My situation is virtually identical. In 2012, I helped my daughter buy her home. She was only 22 years old at the time. In order to get a mortgage, I had to be 50% listed on Land Registry and be the guarantor and joint mortgage holder. The mortgage was an interest only type. My daughter made all the repayments. I have had no other responsibility for the house and my daughter has managed all the financial responsibilities. We have now reached a situation where my daughter needs to change mortgage and as I have joint responsibility for the mortgage I settled the account. The property is now mortgage free. I want to take my details off the Land Registry. There is absolutly no financial gain for me. I feel I'm just doing the right thing and taking my name off the title deed giving my single daughter total autonomy for the property. Do I have any liability for Capural Gains Tax?

Hi Phil,
As joint owner you would be liable as you are disposing of your share.
You will need to send in a decalartion of trust to show that you have no beneficial interest in the property, this cannot be backdated.
Thank you.

Hi - I have a similar situation to Phil’s, but it’s my parent living in the property and my name on the interest-only mortgage. I have never lived there or contributed in any way. If my parent sells the house in the future, I want to make sure she (or I) am not charged CGT due to my name being on the deed and mortgage. I will not gain anything from the sale of the house. If we sent in a declaration of trust dated today, would that cover the situation? Would me or my parent owe CGT (or any other tax) at the point of declaration of trust (e.g. would it be seen as a gift or disposal)? Or is this just formalizing that I have never had any beneficial interest?

Hi,
The beneficial owner of the property would be the person with a potential capital gains liability. The following guidance explains how Private Residence Relief, if appropriate, is applied to reduce a capital gain:
HS283 Private Residence Relief (2024)
There is a capital gains calculator here:
Tax when you sell property
Thank you.

Hi ... I've a similar query about transfer of equity. My wife and I own 2 properties, our marital home and a second property we rent to our special needs daughter for independent living. Unfortunately my wife and I are separating and I would like to remove my name from the deeds of both properties so the ownership moves to my wife. What are the tax implication of this on her?

Hi,
You can see guidance here:
HS281 Capital Gains Tax civil partners and spouses (2024)
Thank you.