Transfer of title on rental property

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    Transfer of title on rental property

    I'm in the process of transferring the title of a property i own, and rent out, to include my wife's name on the title.The total outstanding loan is £110000 on the property.
    My plan was to add her as tenancy in common with 35% of the property as her share. If so should we still pay stamp duty as its our second rental property?
    Ive already asked some people who suggest that the stamp duty consideration should still be 50% if we make this title change which im not sure is correct, any help/advice would be appreciated. Thanks in advance.

    #2
    The value of the transaction will be half of the loan value, because the loan is joint (and not subject to the 35% split). The 3% surcharge will apply if either of you own another property.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      If the transfer to wife is made by gifting ( = no money paid ) , then HMRC considers the consideration paid by wife is really 50% of the outstanding mortgage loan = £55K.

      So sdlt will be charged at 3% of £55K = £1,650 and you + wife both become registered on the property title as "joint tenants".

      If the transfer to wife is done by "sale of 20% interest" ( say property is valued at £150K ) = £30K , which is below the minimum level £40K for charging 3% sdlt .

      So sdlt charged =0, and you + wife become registered on the property tile as "tenants in common" ( H 80% + W 20%) and hopefully your solicitor can vary the % distribution of rental profit by a deed .

      So get a quote from 2 or more different conveyancing solicitor firms before you decide how to proceed.

      Comment


        #4
        Thanks Gordon for your reply, if thats the case who decides the value of the property?

        Comment


          #5
          Further to both of your replies Jpkeates and Gordon,thanks, we believe we may have made a big mistake previously with a title transfer as we assumed that the HMRC information on the website suggested 50% split equalled 50% stamp duty, and so 35% split would therefore equal 35% stamp duty so we thought if 35% of the mortgage is below £40000 for 2nd home, there is no stamp duty. The solicitor we used didn't mention at all about stamp duty for the whole procedure, which was very disappointing. We will suffer a lot of duty, penalties and interest for our first title change. Under this situation, is there any way we can sue the conveyancing company or any organization we could complain to? Thanks.

          Comment


            #6
            Originally posted by streetwize View Post
            Thanks Gordon for your reply, if thats the case who decides the value of the property?
            You should ask a RICS surveyor attached to a local estate agent to give you a letter to show the market value for payment of sdlt purposes .

            Comment


              #7
              Good evening,

              our solicitor has has confirmed there are no stamp duty for this transfer. I also found below information from hmrc website: Transactions

              If you’re transferring ownership (or part ownership) of a residential property to your spouse, the higher rates do not apply as long as no one else is involved in the transfer.

              https://www.gov.uk/guidance/stamp-du...ty#hr-notapply


              That means the considersation is £ 55k, but the stamp duty threshold is £125k , so stamp duty is not applied,
              Is that true? Is this a new policy?
              I also used some online calculator, and the result is the same. There is no stamp duty if the transfer is between spouse even if it is the second house. I also talked to some so called tax expert in my area but he never gave back any answer as he promised.

              Comment


                #8
                The higher rate stamp duty threshold is £40k, so I think your solicitor is right as 35% of £11000 is below that threshold.

                I don't think your reasoning is correct.
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  Originally posted by streetwize View Post
                  Good evening,

                  our solicitor has has confirmed there are no stamp duty for this transfer. I also found below information from hmrc website: Transactions

                  If you’re transferring ownership (or part ownership) of a residential property to your spouse, the higher rates do not apply as long as no one else is involved in the transfer.
                  I don't think this includes the 3% surcharge which would be payable on this transaction plus any linked transactions like your previous transfer.

                  Comment


                    #10
                    Sorry still confusing. I just like to make sure my solicitor is correct.
                    1. SDLTM09820
                    SDLT - higher rates for additional dwellings: purchasers with a spouse or civil partner
                    Purchasers with a spouse or civil partner


                    Where an individual with a spouse or civil partner purchases an interest in a dwelling and their spouse or civil partner is not a joint purchaser, the spouse or civil partner will be treated as a joint purchaser in respect of the transaction [Para 9].

                    This means that where a purchaser is married or in a civil partnership, if Conditions A to D are met by either the purchaser or their spouse or civil partner, the transaction will be a higher rates transaction.

                    This treatment does not apply if the married couple are either legally separated (by court order or deed of separation) or they are, in fact, separated in circumstances in which the separation is likely to be permanent [Para 9(3) and section 1011 Income Tax Act 2007]. From the 22 November 2017 - transfers of interests between spouses and civil partners

                    Before 22 November 2017, transfers of interests between spouses were subject to the same rules as other transfers when Conditions A to D were being considered.

                    From 22 November 2017, the higher rates’ rules disregard transactions solely involving the transfer of interests between spouses or civil partners while they are treated as living together on the date of purchase – see section 1122 of the Corporation Tax Act 2010 for more details [Para 9A].

                    If, before or after the transaction takes place someone other than the spouses or civil partners has an interest in the property, the transaction will still count as a higher rates transaction. For example, a transaction would not be disregarded where an interest owned by a wife and her otherwise unrelated business partner is transferred to her husband. Example

                    Mr I is transferring 50% of a buy-to-let property that he owns to his wife, Mrs I. Mrs I is paying some cash and taking over responsibility for half the mortgage debt. Mrs I owns no other residential property but Mr I owns a number of other buy-to-let properties.

                    For transfers before 22 November 2017, the higher rates will apply to the transfer as Mr I owns other residential properties. As a married couple other residential property owned by either spouse is taken in account in determining whether the higher rates apply.

                    For transfers on and after 22 November 2017, the higher rates will not apply as a transfer between spouses is disregarded as above.

                    Comment

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