Hi,
I and my wife (not working) got married in 2008 and we bought a house in 2009 for £245k on which £160k is the outstanding mortgage. The house and the mortgage is 100% in my name. The mortgage is an HSBC Amanah (Islamic finance) product.
Current value of the property is £500k and we are in process of remortgaging the house and withdrawing some equity to buy a new house. We will put the existing house up for rent. For tax purposes, I was planning to transfer 99% interest in this house to my wife at nil cash consideration.
My questions are:
1. I understand that SDLT will be payable on this transfer. However will it be calculated using: A) on Market Value (£500k); or B) on the old mortgage outstanding amount (i.e. £160k) or C) new outstanding mortgage amount after we have remortaged the house (£375k). I understand that remortage and transfer of title will happen simultaneously but I am not sure legally when exactly the transfer of title occurs i.e. after the remortgaged or before the remortgage transaction?
2. Will the above transfer of interest attract capital gains tax?
3. Is there any alternate better way to plan this transaction from tax perspective? I am a high tax payer and my wife currently is not working so the main purpose is to limit the tax bill on the future rental income.
thanks for your help.
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