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Where Taxpayers and Advisers Meet

A long back story

greenjersey
Posts:20
Joined:Thu Nov 17, 2011 8:01 pm
A long back story

Postby greenjersey » Mon Feb 17, 2020 7:49 pm

Hi, Please be tolerant as I am out of my depth here. In 1990 I bought a BTL property as joint tenants with my wife for £80,000. In 2002 the property was transferred to my sole name. It was let until 2015 when I moved in alone. However we are still very much married and a couple. The current value is about £400,000 so a CGT liability. Firstly am I right in thinking if I pre-decease my wife ( almost certain) and she inherits the house there will be no CGT liability if she immediately sells the house ?
Now this is the part where my brain starts to hurt! Would it make sense if I gifted my wife a share in the house as joint tenants? I have a mortgage of £75,000 having taken out a new mortgage (at 72!) to fund an house deposit for my daughter. Any advice on stamp duty liability appreciated also. Thanks for reading.

SDLT Geek
Posts:228
Joined:Sun Apr 30, 2017 5:45 pm

Re: A long back story

Postby SDLT Geek » Mon Feb 17, 2020 9:23 pm

A gift of a share in the let property would not trigger a charge to stamp duty land tax. Even allowing for the full amount of the debt counting as chargeable consideration, the amount will be below the £125,000 threshold.

The full £125,000 applies even to a let property, as the “higher rates” do not apply to a transfer between spouses who are living together.

maths
Posts:8223
Joined:Wed Aug 06, 2008 3:25 pm

Re: A long back story

Postby maths » Tue Feb 18, 2020 12:10 am

The key to avoiding an SDLT charge on gift to wife is that there is no doubt that you are a married couple and are not permanently separated such that the separation is likely to be permanent.

Were you to be married but treated as separated and assuming wife already has a beneficial interest in another property then the 3% higher rate charge would apply to the gift assuming also that wife accepted responsibility to a % of the outstanding mortgage.

As the SDLT guru and indeed the SDLT Geek do you agree?

SDLT Geek
Posts:228
Joined:Sun Apr 30, 2017 5:45 pm

Re: A long back story

Postby SDLT Geek » Tue Feb 18, 2020 9:26 pm

I agree with maths.

maths
Posts:8223
Joined:Wed Aug 06, 2008 3:25 pm

Re: A long back story

Postby maths » Wed Feb 19, 2020 12:54 am

That's a relief !!

greenjersey
Posts:20
Joined:Thu Nov 17, 2011 8:01 pm

Re: A long back story

Postby greenjersey » Wed Feb 19, 2020 1:44 pm

Thanks for the helpful advice which has raised another query! To my simple mind if I gift my wife half my house that is fairly strong evidence that we are not permanently separated but would HMRC take such a simplistic view? My wife is the beneficiary of my will, I see her every single day. Will HMRC be spying on us? How do I prove our admittedly unusual status?
Thanks


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