Q&A - Loans to adult children - can I avoid a tax trap after the Budget.
Q: I am retired. During the past eight years I have helped both our children to get on the property ladder by lending them the deposit for a house. In both cases the mortgage lender insisted on my name going on the deeds and on the mortgage, something I was happy to do because it also safeguarded my interest in the properties in the event that either child should get married or take a partner who moved in with them. At the time Capital Gains Tax for higher rate tax payers, such as myself, was at a lower level. Will I pay more tax as a result of changes announced in the recent Budget?
A: Unfortunately, despite the fact that you invested in your children's properties prior to the recent CGT increase to 28% for higher rate taxpayers, there is no relieving provision available to you. At the time the properties were bought you were wise to protect your interest in them in the way you describe. The concern now is that your children are older, have probably increased their position in life and are likely to want to move house in the future, for instance if they are in a long-term relationship and/or have children.
In eight years the value of the property in which you have an interest may have increased quite considerably as the market still had not peaked back then. Unlike your children, you will not qualify for principal residence relief on the sale of the properties, although you will of course only be liable for a percentage of the gain equivalent to your investment share of the property. I would suggest that you seek legal advice as soon as possible about your position and the alternatives which you might consider.
Further information relating to this question is available from David Cartwright, a Partner of GHP Legal. David is a member of Solicitors for the Elderly and of the Law Society Probate Section. For information relating to any other legal matter please call GHP Legal on 01691 659194 or from Anthony Danvers a Solicitor who specialises in Elderly Client Services with GHP Legal at The Malthouse Business Centre, Llangollen, Tel: 01978 860313.
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 Local Family expert gains Law Society top accreditation21st July, 2010
The head of one of the area's most respected Family Law teams has been granted membership of the Law Society Advanced Family Panel, with specialist accreditations in the complex fields of Children Law and Domestic Violence.
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Q&A - Can our joint lease be transferred solely to one party when we split up?19th July, 2010
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 New Criminal lawyer for leading law firm19th July, 2010
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 Shropshire Court closures could affect legal representation choice14th July, 2010
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Q&A - Claims company has caused me problems at work.12th July, 2010
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 Leading law firm announces internal promotions2nd July, 2010
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 CGT increase affects parents who helped with house purchase1st July, 2010
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 Skydive lawyer hurts ribs in ladder fall!1st July, 2010
The managing partner of one of the largest law firms in the area successfully completed a tandem skydive from 10,000 feet at Tilstock Airfield, Whitchurch, on Saturday before going home to cut his hedge, when he fell off a ladder and damaged his ribs!!
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 Charity Skydive24th June, 2010
Click the link below to email your pledge.
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