Changing land deed

Please bear with me - I posted this in the tax forum but need to get a legal mind on this now in relation to which deed could be drawn up.

here is the scenario;

2001 Father and Daughter buy land deed states as tenants in common 6.5 acres
2001/02 Daughter applies and is granted planning on one acre
2002 daughter gets mortgage in own name with father as guarantor
2002 as part of mortgage father lodges a statutory declaration in solicitors that he has no beneficial interest in property (required for daughters mortgage bank) and is gifting a sum of money to daughter
2002 daughter builds and moves into house
2009 daughter applies for and given loan offer for remortgage one condition is for solicitor to confirm no third party interest in property
2009 transpires that no deed done in 2002 to transfer one acre to daughter so land the house is on is still tenants in common therefore father has a third party interest in house..

What are the options here
a) to satisfy the no third party interest condition
b) to get the deed for acre into daughters name now? I have been advised that this can only be done on a current date thus significant tax due as a house has been build on the site since it has been bought (CGT for father is over 28K - he is a pensioner with no way of paying this) also daughter will incur stamp duty. Had deed been done in 2002 it would have incurred no taxes. Is there any way of backdating the deed or doing some type of deed to partition the land to reduce tax bill as neither party in a position to pay.. The intention was always that the Daughter would live on that acre, situation was not handled correctly at the time.

Please help as remortgage money is needed for daughter to keep her home.

This all seems very strange. Surely the transfer to the daughter would have had to be done in 2002 to get the first mortgage. I would suggest talking to the solicitor about this matter. If what you say is correct s/he should be the ones sorting out the problem.

Hi

I have been onto the solicitor and they tell me that as the bank did not look for a separate deed the drawing up of the deed was not triggered at that time??
They are saying now that there is nothing on file about the daughters planning and house building - this is despite the fact that they handled the daughters mortgage etc

Im going around and around in circles with this getting nowhere so appreciate all the help I can get.

These people seem to live complicated lives. Ask your solicitor to advise.

Hi Nuac
I have been on to the solicitor as mentioned in my last post. The solicitor says there is nothing they can do other than a deed of a current date - this leaves a huge tax bill which neither can pay.

Bearing in mind the parties involved are not solicitors - they were not aware that a deed was a) required and hence b) not processed - the father signed a declaration in the solicitors office saying he had no legal interest in the house and as far as he thought that was the end of that - no deed was mentioned at the time. Im looking for further advice here from anyone as surely there has to be something that can be done. thanks for your input.

Monsoon said:

Hi Nuac
I have been on to the solicitor as mentioned in my last post. The solicitor says there is nothing they can do other than a deed of a current date - this leaves a huge tax bill which neither can pay.

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I'm not surprised, what you're suggesting pretty much amounts to tax evasion.

The father doesn't have a third party interest in the house - he is part owner. My understanding may be wrong, but can the father not just gift his interest in the property to the daughter? Surely there would be no CGT liability there, as no gain was realised, and the CAT liability on the part of the daughter should come in under the threshold for a gift from father to daughter.

Another possibility is whether the declaration in 2002 is actually a declaration of trust where the father acknowledged that he held the property on trust for the daughter. If that's the case, then he should be able to transfer the property to her without any liability as there is no actual interest passing - all he's doing is passing legal title.

Basically you need expert advice.

Hi J26

Thanks for your input - For the record I dont want to evade tax Im finding it hard to understand how logically my father and I have to pay so much tax all because we did not have this deed thing done in 2002. Neither of us are legal professionals and thought that all was sorted out back then with the solicitor as we signed all the paperwork etc given to us. I am paying proper taxes all my life and am not wishing to to evade now!! I simply want to get this all legalised and hold onto my house that I have paid the mortgage on since day one. We did not even realise my father was as you say part owner until I went to remortgage.

The declaration was not a deed of trust, it was required for the mortgage.

I understand that if my father gifts it to me now he is liable for the CGT as it is on disposal of an asset rather than on any gain so that still leaves the big tax problem. I am also liable for stamp duty afaik.

Surely there has to be some common sense legal way of rectifying this - it was a genuine oversight/mistake or whatever you want to call it.
Had the bank looked for this separate deed aparently it would have been done by the solicitors at the time but they didnt so no deed drawn up - it just seems so crazy.
Thank you for trying to help so far.

Hi Monsoon, what you are saying in this post is different from the circumstances you outlined before- in a previous post you stated that it was the father who took out an interest only loan to purchase the land. Which is correct?

Hi Vanilla

Yes he did take out an interest only loan whereas my loan was a normal loan does the interest only part make a difference? thanks

Hi Monsoon, I misread your earlier post.

Difficult situation and really, given the levels of potential tax involved, you should get good tax advice as well as legal advice in a combined effort.

I can see at least four possibilities here:

1. You deal with the transfer of land now in a straightforward deed of partition and pay your taxes.

2. You just deal with the transfer of the site by way of a deed of partition and rectification. Although you do not qualify for the 'parent to child site transfer' relief on the strict facts, you can make a case to the revenue commissioners that this is a deed of 'rectification' and that it should have been done back in 2002, that if it had been done then that you would have qualified for the relief, give them an affidavit confirming that you paid for the building of the house yourself and that your father did not contribute and basically try to claim the relief. I have done this in similar ( although not exactly the same) circumstances for a client successfully.

3. If the intention at the time of purchase was that you would be the eventual owner and your father only became a tenant in common in order to obtain funding for the purchase ( I'm not sure this fits your facts), then you could now have him execute a declaration of trust, stating that he held only in trust for you, that you provided all the purchase monies or repaid same to him and that he never held a beneficial interest in the property and then do a deed of partition transferring all his interest to you. This would then be free of CGT and stamp duty IF the revenue agree the position.

4. Do nothing now or again remortgage in your joint names and wait to inherit your fathers interest. Inheritances are free of stamp duty and CGT but not CAT. However you can show that you built the house from your own funds etc to offset against any potential CAT.

These are some ideas I am throwing out, you understand, you still need good tax and legal advice.

Monsoon said:

I have been on to the solicitor as mentioned in my last post. The solicitor says there is nothing they can do other than a deed of a current date - this leaves a huge tax bill which neither can pay.

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Based on this my best advice to you would be to hire Vanilla who has given you many options and more importantly has been through somewhat similar circumstances for her clients.

Vanilla: thank you so much for your input. Option one is out, my solicitor wont agree to do a rectification deed or trust deed and has advised me today to now to call into revenue and talk to them directly myself. This, I have to decide as I have met with two tax advisors now and both of them told me not to approach revenue on my own and let solicitor handle it. I think I may need to change solicitors! Looks like my remortgage is gone now as I only have three weeks left - solicitors have been sitting on this for too long... more sleepless nights ahead for me so. But a sincere thanks to you for your post.

Bronte: you may well be right here! Any connection to Vanilla ) (joking)..