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Where Taxpayers and Advisers Meet

Rules for Buy to Let ownership transfer to spouse

wpp50
Posts:8
Joined:Fri Dec 21, 2012 2:45 am
Rules for Buy to Let ownership transfer to spouse

Postby wpp50 » Thu Jun 14, 2018 8:39 am

Hi
I believe the transfer of ownership of a Buy to Let property from husband to wife or the way round is a "benign" transfer.

ie is is NOT classed as a purchase and there are no Stamp duty or Capital gains or any other considerations

Is this correct?

Many thanks

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Rules for Buy to Let ownership transfer to spouse

Postby SteLacca » Thu Jun 14, 2018 12:26 pm

It is correct. For capital gains purposes on eventual disposal, you also transfer the original base cost (i.e. it doesn't acquire a new base cost at the time of transfer).

someone
Posts:691
Joined:Mon Feb 13, 2017 10:09 am

Re: Rules for Buy to Let ownership transfer to spouse

Postby someone » Thu Jun 14, 2018 8:00 pm

There might be stamp duty if there's a mortgage involved.

wpp50
Posts:8
Joined:Fri Dec 21, 2012 2:45 am

Re: Rules for Buy to Let ownership transfer to spouse

Postby wpp50 » Thu Jun 21, 2018 11:06 pm

There might be stamp duty if there's a mortgage involved.
Ok
That’s a helpful reply that I’ve been chewing on for a while.

Yes it seems that if the spouse takes over the mortgage then there could be some stamp duty.

However in our case – My wife owns the property with a mortgage.

The transaction we want to do is:-

- Simultaneous ownership transfer to me with new mortgage in my name(different lender) that pays off original mortgage in my wife’s name.


So – there is no “taking over” of a mortgage.

In this situation, are we Stamp-Duty Exempt?


Thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Rules for Buy to Let ownership transfer to spouse

Postby bd6759 » Fri Jun 22, 2018 12:25 am

No, because you are paying of her mortgage.

wpp50
Posts:8
Joined:Fri Dec 21, 2012 2:45 am

Re: Rules for Buy to Let ownership transfer to spouse

Postby wpp50 » Fri Jun 22, 2018 7:34 am

No, because you are paying of her mortgage.
OK!
So if she pays off her mortgage first - even by a day, before I take out the new mortgage, then this should make us exempt?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Rules for Buy to Let ownership transfer to spouse

Postby maths » Fri Jun 22, 2018 11:53 am

The transaction we want to do is:-

- Simultaneous ownership transfer to me with new mortgage in my name(different lender) that pays off original mortgage in my wife’s name.
This is likely to be treated as an assumption of her mortgage liability and SDLT charged.

someone
Posts:691
Joined:Mon Feb 13, 2017 10:09 am

Re: Rules for Buy to Let ownership transfer to spouse

Postby someone » Fri Jun 22, 2018 4:28 pm

There might be stamp duty if there's a mortgage involved.
Ok
That’s a helpful reply that I’ve been chewing on for a while.

Yes it seems that if the spouse takes over the mortgage then there could be some stamp duty.

However in our case – My wife owns the property with a mortgage.

The transaction we want to do is:-

- Simultaneous ownership transfer to me with new mortgage in my name(different lender) that pays off original mortgage in my wife’s name.


So – there is no “taking over” of a mortgage.

In this situation, are we Stamp-Duty Exempt?


Thanks
This is one of those 'it depends' situations.

If the wife pays off the mortgage using her funds, then gifts the property to you, then you take out a mortgage to buy youself a new car - probably no SDLT although you might have to argue it

You give the wife the money. She pays off the mortgage, gives it to you, you then mortgage to replace your savings - SDLT probably due, HMRC will argue that the two gifts are linked.

But - you give the wife the money. She pays off the mortgage. Two years later she gives you the property and you take out a mortgage on it, I'd expect the two gifts to be sufficiently remote as to not be linked.

Expect many different opinions if you give the wife the money, she pays off the mortgage and then gives the property to you but you do not take out a new mortgage. I have no idea how it might be treated. HMRC will certainly want to link thebtransactions.

One thing to note, if the wife has any PPR then a 100% gift to you will extinguish it, even if you give it back later. A 99% gift won't (but you'll probably need a joint mortgage)

And solicitors aren't on top of the rules WRT SDLT (IME) on transfers of equity between H&W. They may either calculate too much or too little SDLT so it's a good idea to know in advance how much it will be

IANAA (I am not an accountant)

Note also that SDLT is charged on the debt assumed, not the property value.

wpp50
Posts:8
Joined:Fri Dec 21, 2012 2:45 am

Re: Rules for Buy to Let ownership transfer to spouse

Postby wpp50 » Fri Jun 22, 2018 6:00 pm

This is one of those 'it depends' situations.

If the wife pays off the mortgage using her funds, then gifts the property to you, then you take out a mortgage to buy youself a new car - probably no SDLT although you might have to argue it

You give the wife the money. She pays off the mortgage, gives it to you, you then mortgage to replace your savings - SDLT probably due, HMRC will argue that the two gifts are linked.

But - you give the wife the money. She pays off the mortgage. Two years later she gives you the property and you take out a mortgage on it, I'd expect the two gifts to be sufficiently remote as to not be linked.

Expect many different opinions if you give the wife the money, she pays off the mortgage and then gives the property to you but you do not take out a new mortgage. I have no idea how it might be treated. HMRC will certainly want to link thebtransactions.

One thing to note, if the wife has any PPR then a 100% gift to you will extinguish it, even if you give it back later. A 99% gift won't (but you'll probably need a joint mortgage)

And solicitors aren't on top of the rules WRT SDLT (IME) on transfers of equity between H&W. They may either calculate too much or too little SDLT so it's a good idea to know in advance how much it will be

IANAA (I am not an accountant)

Note also that SDLT is charged on the debt assumed, not the property value.
Many thanks for taking the time to put all this down.

I had thought it would be simple!

I need to go away and think...


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