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Where Taxpayers and Advisers Meet

Property Flip - Deed of Trust

businessmind
Posts:12
Joined:Sun Feb 07, 2010 6:33 pm
Property Flip - Deed of Trust

Postby businessmind » Tue Dec 01, 2020 7:30 pm

I wonder if someone might be able to provide a view before I appoint a professional advisor.

My partner (we are not married) is looking to buy a property to refurbish and sell on with money she has inherited (no mortgage).

She lives with my in a house which I own in my sole name without a mortgage and she doesn't own any other property so buying the investment property in her sole name makes sense to avoid the 3% additional SDLT charge.

If she bought it in her sole name for say £120k could she immediately implement a Declaration of Trust to gift me say 30% (£36k), which would be under the £40k threshold for the 3% additional SDLT charge?

I don't currently work (no taxable income) so could assist with the refurbishment and my thinking is that if it was then sold for say £160k (£40k profit for argument sake) my share of that profit (£12k) would fall within my personal income tax allowance. If it did not sell and was rented instead I would then benefit from a share of the rental, again within my person tax allowance, and potentially from my CGT allowance if sold at a later date. Does that make sense or have I missed something?

Very many thanks in advance.

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

Re: Property Flip - Deed of Trust

Postby AGoodman » Wed Dec 02, 2020 10:31 am

I can't immediately see anything wrong with that.

The sensitive point is the SDLT, given you would be paying the additional 3% if you were a joint buyer from the off.

However, I don't think that is a significant risk assuming you're not providing any of the purchase price when your partner buys.

businessmind
Posts:12
Joined:Sun Feb 07, 2010 6:33 pm

Re: Property Flip - Deed of Trust

Postby businessmind » Wed Dec 02, 2020 12:41 pm

Thank you very much for the reply.


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