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Where Taxpayers and Advisers Meet

Potential for SDLT and CGT on future transfer of equity?

pbywater
Posts:1
Joined:Sat Feb 03, 2018 6:22 pm
Potential for SDLT and CGT on future transfer of equity?

Postby pbywater » Sat Feb 03, 2018 6:43 pm

Hi all,

I hope someone can chip in with advise on the below situation:

- I already own a home, my girlfriend is a first-time-buyer.
- My girlfriend intends to purchase a property with an approx price of £275k.
- As the price is below the new £300k FTB threshold there is no STLD to pay.
- She would require a £220k mortgage.
- In the near future I'd like to take up half ownership.
- I believe I would be liable for 3% of half of the outstanding mortgage due to owning a second home, so 3% of £110k = £3,300 (SDLT).

Is that correct? If so, then that's fine. The thing I can't work out relates to capital gains tax. Lets say the property value rises to £350k when the transfer of equity happens, would this incur additional taxation? If it does, would the additional tax be payable at the time of equity transfer, or at some point in the future if the property is sold?

Lastly, Would there be any benefit in assigning 50% of the property (and it's future sale) to me via deed of trust, Vs transferring equity and putting me on the mortgage (assuming the two approaches are actually different!)?

Thanks in advance!

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

Re: Potential for SDLT and CGT on future transfer of equity?

Postby maths » Mon Feb 26, 2018 9:13 pm

The transfer of say a 50% interest of your girlfriend's property to you can be by way of gift or sale.

I assume you intend to purchase the 50%.

Say at time of purchase property worth 300k and mortgage 220k.

50% is worth 150k. As girlfriend lives in the property she will not be subject to capital gains tax on any gain.

Presumably you would transfer 50% of [300k - 220k] ie 40k and take on 50% of the mortgage for a 50% interest.

SDLT at 3% would be payable by you on 150k.

VPY
Posts:2
Joined:Thu Mar 15, 2018 7:14 pm

Re: Potential for SDLT and CGT on future transfer of equity?

Postby VPY » Tue May 01, 2018 4:20 pm

50% is worth 150k. As girlfriend lives in the property she will not be subject to capital gains tax on any gain.
Presumably you would transfer 50% of [300k - 220k] ie 40k and take on 50% of the mortgage for a 50% interest.
SDLT at 3% would be payable by you on 150k.
Will SDLT be the same if OP purchase the 50% without mortgage?


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