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Where Taxpayers and Advisers Meet

Transfer BTL to joint ownership with spouse to reduce GCT

MGB23
Posts:2
Joined:Thu Feb 14, 2019 6:49 pm
Transfer BTL to joint ownership with spouse to reduce GCT

Postby MGB23 » Thu Feb 14, 2019 7:08 pm

I own a house solely in my name which I purchased approximately 4 years ago. I am now selling the property through an estate agent and have an offer from a buyer. The house has been used as a BTL and there will be a capital gain of over £25k. I understand we can reduce the overall CGT payable by transferring it into the joint names of myself and my spouse before the property is actually sold. There are no open loans or mortgages against the property, which I believe means that the transfer between spouses would not incur an SDLT liability.

Our solicitor has advised that:
1 That if the buyer is taking out a mortgage on the property they will find this difficult to do if the property has not been in joint names for 6 months before it is sold
2 That by agreeing to act on our behalf in this way they would be supporting tax avoidance (not evasion), which they are unable to do.

I have also read elsewhere on this forum that HMRC may attack this transaction because it is designed purely for tax planning. Your advice would be appreciated.

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

Re: Transfer BTL to joint ownership with spouse to reduce GCT

Postby bd6759 » Thu Feb 14, 2019 10:39 pm

It is tax planning, but it is using what the law was designed for.

You don’t need to change anything at the Land Registry. Just create a declaration of trust. This is a statement, in writing, by you that you hold the property for the benefit of yourself and your wife in equal proportions.

Google it for more information.

MGB23
Posts:2
Joined:Thu Feb 14, 2019 6:49 pm

Re: Transfer BTL to joint ownership with spouse to reduce GCT

Postby MGB23 » Fri Feb 15, 2019 12:48 pm

Thanks, very helpful. Will there be an issue with declaring the change of beneficial ownership immediately before the sale? The existing 100% ownership has worked for us as regards income tax on the rental income, but we want to change it before disposal to plan for CGT. I assume my conveyancing solicitor is best place to draft the declaration of trust?

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Transfer BTL to joint ownership with spouse to reduce GCT

Postby AdamS93 » Fri Feb 15, 2019 4:41 pm

Thanks, very helpful. Will there be an issue with declaring the change of beneficial ownership immediately before the sale? The existing 100% ownership has worked for us as regards income tax on the rental income, but we want to change it before disposal to plan for CGT. I assume my conveyancing solicitor is best place to draft the declaration of trust?
Not if that is a true reflection of the actual situation (i.e. your wife will benefit from half of the sales proceeds and she is free to do what she wishes with it). If you will benefit from all the sales proceeds, the declaration of trust isn't worth the paper it is written on.


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