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Where Taxpayers and Advisers Meet

Transfer Buy to Let property

Mr Vee
Posts: 1
Joined: Mon Jul 08, 2019 5:42 pm

Transfer Buy to Let property

Postby Mr Vee » Mon Jul 08, 2019 6:10 pm

Hi there,

In 2012, myself and my husband wanted to purchase a flat. We had a mortgage issue near completion due to the fact that the lender would only allow a maximum of 4 mortgages with them which we had.

Due to the limited time we had left to complete, our broker advised us to purchase the flat in my sisters sole name as the lender had already completed the survey. We paid the reservation fee, solicitor fees and stamp duty. All outgoing for the flat have been paid by us including all mortgage payments. She would like her name removed from the mortgage and land registry.

The flat was purchased for £185,000 and is valued at £300,000. There is roughly £124,000 mortgage outstanding which we can clear if it makes the transfer process easier.

What is the best way of doing this? Will there be any stamp duty and capital gains to pay?

We set up a deed of trust which reflects my sister having a 0% share and interest in the property and that she was only used as name only as we couldn't acquire a mortgage at the time.

Any input greatly appreciated with thanks.

Posts: 419
Joined: Mon Feb 13, 2017 10:09 am

Re: Transfer Buy to Let property

Postby someone » Tue Jul 09, 2019 5:01 pm

If there is no change in beneficial interest there is no SDLT due. You may, or may not, have problems convincing your solicitor about that.

It will cost you more in legal fees if there is a mortgage and it will require the approval of the lender. But there is no fundamental reason to redeem the mortgage first.

This transaction is called 'a transfer of equity' even if no equity is transferred.

Posts: 419
Joined: Mon Feb 13, 2017 10:09 am

Re: Transfer Buy to Let property

Postby someone » Tue Jul 09, 2019 7:14 pm

Sorry, I misread your initial post and assumed all three of you were on the title.

This probably isn't called a transfer of equity.

The CGT position remains the same - no tax due if there's no change in beneficial interest.

I don't know about the SDLT position. I would assume liability for the mortgage is with your sister and will move to you and therefore the mortgage amount would be assessed for SDLT. But it might depend on the exact wording of the declaration of trust.

Paying off the mortgage first would mean there's no consideration and so no SDLT.

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