If so, how do I go about it as I would then like to take over the property, which I assume will mean refinancing? If I chose to buy out the balance of the flat from my brother is there any tax implication on either of us?
Arthur Weller Replies:
For two reasons there are no tax implications on either of you if he ‘gifts’ to you 50% of the property. If your 'family understanding' means that you actually own 50% of the beneficial ownership of the property, even though the property is legal entirely in his name, then putting your name on the legal documents, making you a joint legal owner, has no tax consequences. This is because tax is only concerned with the beneficial ownership, and by transferring half of the legal ownership nothing has happened in tax terms.
If your 'family understanding' means that you do not actually own 50% of the beneficial ownership of the property, then when he ‘gifts’ to you 50% of the property something is happening for tax purposes.
However there should be no tax implications on either of you since he is non UK resident and not subject to UK capital gains tax. And since it is a gift for no consideration - there is no stamp duty land tax on you.
Your brother can gift 50% of the property to you, in the first scenario above, just by instructing your solicitor to get the legal documents changed into the joint names of both you and your brother. In the second scenario above, your brother can either do a formal conveyance or write a deed of trust, ensuring that you have 50% of the beneficial ownership of the property.
If you choose to buy out the balance of the flat from your brother then again there should be no UK capital gains tax for your brother since he is non-UK resident but there may be stamp duty land tax on you - depending on the price you pay him.
