rental property and stamp duty for adding spouse

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    rental property and stamp duty for adding spouse

    Hi, We've 2 properties, we released equity from our first home to buy our second, we've letted out first property, both are on my name only, my wife is home maker.

    Rental propery BTL mortgage 260K, ddid'nt realise I could have added my spouse onto the title/mortgage on both properies at point of purchase at no additional cost and also tax benefit on rental income 50/50.

    To add spouse name onto BTL property now, seems it would trigger SDLT ? is there any alternatives options available to show part of rental income as spouse, so i could stay at 40 percent tax rather than higher tax of 60%.

    Any advise is greatly appreciated !

    Thanks,










    #2
    If the BTL property has a mortgage in your name only, to transfer title to your wife, you would also need to add her to the mortgage (unless your lender agrees otherwise, which they won't).
    And then the SDLT for the title change would be based on 50% of the outstanding mortgage balance (unless you agree a different percentage ownership).
    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).

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      #3
      If your second purchase was recently completed , ask the Land Registry , if you can add your wife's name without paying additional sdlt .

      Comment


        #4
        thanks for response,
        jpkeates - I've checked with lender, they are happy to add wife for small admin fee, need solicitor to transfer but looks okay, the painful part is SDLT.

        Gordon999 - it was bought 2 years ago, not sure if thats within reasonable time limit, i'll check anyways..

        is Declaration of Trust an viable option without triggering SDLT ?

        or

        if I transfer lets say 1% to spouse would that avoid SDLT or is the minimum 50% as the default tax is 50/50 ?





        Comment


          #5
          Originally posted by Gordon999 View Post
          If your second purchase was recently completed , ask the Land Registry , if you can add your wife's name without paying additional sdlt .
          how recent is recent? e.g. less than 6 months

          Comment


            #6
            Originally posted by beccajohnson View Post

            how recent is recent? e.g. less than 6 months
            I don't know how to answer your question. I have noticed some Government Departments will allow you to correct mistakes in Registration. So my suggestion to OP was to ask LR if any correction is allowed ?

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              #7
              I've consulted tax and legal advisors (seems reputated based on google reviews), advice given was to setup DOT with wife as 100 percent beneificatory owner for rental income without changing legal ownership of the BTL property,( No need to add wife name to mortgage/tilte), also no form 17 required to update HMRC.

              All seems too good to be true - Has anyone done this way ? is this acceptable in the eyes of HMRC.


              Comment


                #8
                HMRC won't have an objection, your mortgage lender probably will.
                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
                  Thanks Jpkeates, great to know HMRC wont object !

                  Checked with lender, they are not concerned with DOT or whoever the assigned benefictory is as long as current legal ownership is not changed.

                  I'm sure there are many others with similar situation on their BTL properties but not sure why this simple route of setting up DOT is considered or advised as common ? as it saves on SDLT, additional surcharge and allows you to assign 100% or as needed without requiring to submit form17.

                  Anyone similar to my case, please comment...it helps to clarify if this is a valid and legit route for everyone to make use of tax efficiency.



                  Comment


                    #10
                    Originally posted by mathews View Post
                    I'm sure there are many others with similar situation on their BTL properties but not sure why this simple route of setting up DOT is considered or advised as common ? as it saves on SDLT, additional surcharge and allows you to assign 100% or as needed without requiring to submit form17.
                    They're a bit more expensive, a bit more complex and the question is usually asked about jointly owned property?
                    And you seem to have a reasonably flexible lender, often there's a simple prohibition on changing beneficial ownership without consent and a "computer says no" response.


                    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


                      #11
                      Thanks for the prompt responses.

                      If property is jointly owned, understand we need to sever it, change to Tennants in Common before setting up Deed of Trust to transfer beneficial ownership. Dose the legal ownership needs to match the beneficial ownership or can it be different ? example wife and I own 50% in equal as Tennants in Common but the Deed of Trust confirm Wife is 99% beneficial owner ?

                      Don't think we need to pay SDLT again for transfer of benefical ownership (not changing legal ownership) ? please share your experiences.

                      Comment


                        #12
                        The deed of trust is specifically so that your 50:50 title ownership can be varied as you wish.
                        What normally seems to happen is that the tenants in common registration doesn't specify the ownership split, which is then presumed to be 50:50 and then the deed sets the percentage.

                        Someone posted a while ago that they had gifted a very small share of the property to his wife, so that it remained under the SDLT threshold and then varied that (say) 5%:95% to the desired ratio.
                        I didn't know it was possible to do that, but they were confident that they could and said that they'd had that confirmed by some proper legal people, so that might also be something to consider.
                        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


                          #13
                          mathews,

                          I'm confused. Do you own the properties in your name only or jointly? I know the consensus on the forum is that you can create a DOT without changing the legal title but I don't know how you can honestly say that your wife is the TRUE and beneficial owner of a property that is registered solely in your name. For that reason I consider it to be a risky transaction.

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