Transfer of property to spouse

[Rob london]

My civil partner bought a property in 2021, value £665,000. She would now like to give me a half share. What is the best way of doing this (Land registry, deed of trust, beneficial ownership)? We would like to avoid SDLT and CGT (either now or in future). Would there be tax implications if I were to pay her £337,500 (being half the value of the property). Thanks for any help provided.

[AGoodman]

Assuming no mortgage, there is no tax on a gift between civil partners.

If you paid for it, there would be SDLT on that payment.

From a legal perspective, it probably makes sense to do it properly and transfer the property into your joint names - either as joint tenants or tenants in common and register it with the Land Registry.

[Rob london]

Thanks for the reply. To be clear though, if we register the property as joint tenants at the land registry, will it be subject to SDLT if I have paid my civil partner half the purchase value? Will it be subject to CGT, either on purchase or on subsequent sale, as the property is now worth @£150,000 more. Even if 50% is gifted and therefore no SDLT, will I be subject to CGT on future sale? So confusing.

[AGoodman]

Yes, if you pay for an interest in land, the payment will be subject to SDLT. nb you can't escape this by calling it a gift of property and a separate gift of cash.

There won't be any CGT as there is a deemed no gain/no loss under s.58 TCGA.

You would be treated as receiving the property at the original purchase value so, on a future sale, you would both be at risk of CGT on the gain over the original purchase price that your civil partner paid for it. Obviously, if it is your residence, you could both benefit from PPR and you would (to some extent) inherit your civil partner's PPR history under 222(7). You would need to read over the relevant provisions (or get an accountant at the time) if that is complicated.

[Rob london]

All understood. Thanks for taking the time to reply.

[maxime44]

Yeah, this gets confusing quickly.

If it’s a straight transfer between civil partners, there’s no CGT now, it’s treated as no gain/no loss and you inherit the original purchase price.

SDLT is the key point. If you pay her for the share, that payment can trigger SDLT. Calling it part gift doesn’t really change that.

For later, CGT is just deferred, not avoided. On sale, it’s based on the original price.

If it’s your main residence, PPR relief will likely cover most of it anyway.

[Rob london]

Thanks for your reply maxime44.