Remortgage as tennats in common

by **Maria L** on Tue Jul 26, 2011 12:21 pm

Hi All,
Hopefully it will be a simple question of yes or no. My apologies if it was asked before but I couldn't find post like this on the forum.
My partner bought a property in 2000 as a sole owner and he was paying the mortgage on his own, but I've moved in five years ago. Now we have remortgaged the house as tenants in common (the value of mortgage is the same as previously). We have the mortgage and deeds in both names and we owe it in 50% shares each.
As the property was his and now is jointly owned do any of us have to pay any kind of tax on it? if not at the moment can someone please advise if we will have to pay any tax in future - for example when we decide to sell it?

figures are
house is worth 110k, mortgage is 59k.
I will be most grateful for your responses and help.

by **Incredulum** on Tue Jul 26, 2011 12:51 pm

This is a property that:
1. he has always lived in; and
2. you have always lived in for as long as you have had a 50% share.

by **Tax Champion** on Tue Jul 26, 2011 4:59 pm

Assuming you are not actually married, your partner gifted you a 50% share in the property for no cost, so made no gain at that time.
If you both continue to live there until it is sold, the private residence exemption will still apply, and you will not have any tax bills in respect of the sale.

by **Incredulum** on Tue Jul 26, 2011 5:37 pm

Tax Champion wrote:Assuming you are not actually married, your partner gifted you a 50% share in the property for no cost, so made no gain at that time.

Not so.

Assuming you are not actually married, your partner gifted you a 50% share in the property at a value DEEMED to be market value and he crystallised a gain at that point based on that value.

If it was his main residence for the entirety of the period of his ownership then he is granted relief from the tax due.

by **Maria L** on Thu Jul 28, 2011 4:37 pm

Hi guys, thank you for your response.

just to clarify - we are not actually married and it is his main residence from the date of purchase and mine for over 5 years (we only re-mortgaged this year).

thanks again.

by **Incredulum** on Thu Jul 28, 2011 4:47 pm

Remortgaging does not give rise to tax.

His disposal to you of a part of his main residence did not give rise to CGT. If you paid him, or took on a part of his mortgage, then SDLT may have been in point depending on values at the time.

A subsequent disposal by the two of you, provided you always live in the house (or dispose of it within three years of moving out) will not give rise to CGT.

by **maths** on Thu Jul 28, 2011 5:10 pm

An SDLT charge arises on the remortgaging if 50% of the amount of the mortgage redeemed is greater than £125K.

by **Incredulum** on Thu Jul 28, 2011 5:22 pm

Just in case OP is confused. I should have written "In general, remortgaging does not of itself give rise to tax. When the remortgaging arises in conjunction with the transfer of a half of the property to a third party then the taking on of a mortgaged property where the amount of mortgage taken on exceeds 125k gives rise to SDLT. Happily the share of mortgage OP is taking on is only 30k so SDLT does not apply."