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Where Taxpayers and Advisers Meet

Transferring our share of the property

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm
Transferring our share of the property

Postby ritzy11 » Wed Jan 22, 2020 4:58 pm

Hi Guys

Wondering if you can help

Me, my brother and my mum own a property that we live in as our main residence. We had a mortgage under my name and my brother's name but the mortgage has now been fully paid.

My brother has brought another property and it has been around 2 years since purchase. He has been living there as main residence for around 1.5 year and wants to claim back on the stamp duty he has paid on that property as this will now be his main residence going forward.

I am looking to also move out

Me and my brother would both like to transfer our value of the property over to our mum. I understand this will have stamp duty implications on my mum. Please can you confirm the calculations are correct assuming our property is worth £500k.

500,000 divided by 3 people = £166,667 per person

Stamp Duty my mum has to pay for the transfer = £1,666

Mine: £166,667 less £125,000 = £41,667 x 2% = £833
My Brother : £166,667 less £125,000 = £41,667 x 2% = £833

Thanks :-)

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Transferring our share of the property

Postby AGoodman » Thu Jan 23, 2020 1:43 pm

1. If you're just giving your share away then there's no SDLT to pay.
2. If you're selling it to her, the buyer pays SDLT (ie her) and I would expect it to be treated as a single composite transaction or linked transactions (it merits checking). If i'm right, she pays SDLT on the value she pays you collectively (don't divide it by two) .

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transferring our share of the property

Postby ritzy11 » Thu Jan 23, 2020 5:43 pm

Thanks for your reply AGoodman,

1) We are looking to just give away our shares. If we do this, would my mum be liable to CGT? (I'm guessing there won't be as it's her main residence and has always been her main residence ...)

cheers

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transferring our share of the property

Postby ritzy11 » Thu Jan 23, 2020 6:41 pm

And also

by "giving away" his share to my mum, is my brother able to claim back the extra he paid on stamp duty when he purchased another property ( which is his main residence now )

someone
Posts:692
Joined:Mon Feb 13, 2017 10:09 am

Re: Transferring our share of the property

Postby someone » Thu Jan 23, 2020 7:04 pm

And also

by "giving away" his share to my mum, is my brother able to claim back the extra he paid on stamp duty when he purchased another property ( which is his main residence now )
Yes. It's disposal that matters, not whether the disposal was for consideration or not.

But there's a possible wrinkle to this - that the property had to be bought with the intention of making it a main residence at the time of purchase. HMRC are possibly able to query why it took (6?) months to move in and so reject the claim for the 3%

(Obviously, if the property was dilapidated and needed renovation, or if there was a job move and the purchase and job moves didn't quite sync up then that is probably a reasonable explanation. But it might depend on how things like council tax were paid (declared as second home or empty for example) if the properties are close together and there isn't an overriding reason why it wasn't made the main home from day 1)

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transferring our share of the property

Postby ritzy11 » Fri Jan 24, 2020 12:27 pm

that's really helpful. thank you very much for your help :-)

ritzy11
Posts:11
Joined:Thu Dec 19, 2019 5:16 pm

Re: Transferring our share of the property

Postby ritzy11 » Fri Jan 24, 2020 2:05 pm

hi guys, sorry just had a few more questions...

Let's say once me and my brother have both transferred our share and made my mum the sole owner of the property

> could I carry on living with my mum without any tax implications?

> if my brother moved back into this property few years down the line and put the one he is living out to rent, would he have to re-pay the stamp duty refund?


My mum is looking to create a "will" and in it she will put that the property will be distributed equally between us and my two sisters

> would that be a tax efficient way of doing this to minimize Inheritance Tax? eg. 7 year rule - and taper relief?

thanks


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