Gift Property to avoid Stamp Surchage

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    Gift Property to avoid Stamp Surchage

    Hi guys,

    1st post here thought I try my luck here.

    I have a fairy basic question which I thought many would have come across. I currently own 100% of my main residence (call property 1), and I live with my unmarried partner who has no property under her name. I am at 45% tax rate while she is at 20%.

    We are thinking about buying our next property (while keeping the existing one as a BTL). After reading around on the stamp duty treatment, we were just curious if the below would work:

    1. At the time of buying our new property (cal property 2), I will pay off the mortgage on Property 1, and gift Property 1 to my unmarried spouse at nil consideration. She will then remortgage the property with a new BTL mortgage. and I will be considered as disposed my main residence.
    2. I will then be the sole owner of our new property, and get a normal residential mortgage on it.

    Do you see any obvious issues/flaws on it?

    The only issue I may have is would she be entitled to claim the full BTL mortgage interest relief once after the transaction? I did see a few articles on remortgaging BLT property being capped at the "initial investment value", would her initial investment value be the market value of Property 1 at the time she was gifted it?

    PS . if any one who has got a good tax accountant to recommend i'd be interested in one. I am london based but i presume anyone in England will probably do. I did look at some of the usual ones but thought what they offer was way above what i needed (got one who would prefer me to sign up for a 12 month monthly service, which I am pretty sure i will not utilise them..).

    Thank you!

    #2
    Yes most of what you say is right. There is a heavy tax on marriage - which you are avoiding by being unmarried.

    - Resetting the market value for purposes of her CGT which you would be unable to do if married
    - Avoiding SDLT on other purchases in YOUR name

    Comment


      #3
      I suppose the obvious question is can your partner remortgage property 1 with no previous mortgage history ?

      Comment


        #4
        Originally posted by Neelix View Post
        I suppose the obvious question is can your partner remortgage property 1 with no previous mortgage history ?
        yeah it is a good question. as it will be a BTL so will just be the usual BTL prudent tests, hopefully just a question of can the rent cover the amount we want to borrow. I think some banks may not be willing to lend to her if she has no other main residence (i.e. HSBC has this rule).

        I was more worried to what cost base (given she got it for nil consideration) can she rely on the mortgage interest relief.

        Comment


          #5
          Originally posted by AndrewDod View Post
          Yes most of what you say is right. There is a heavy tax on marriage - which you are avoiding by being unmarried.

          - Resetting the market value for purposes of her CGT which you would be unable to do if married
          - Avoiding SDLT on other purchases in YOUR name
          I suppose the other alternative is to buy the property 2 in her name (provided she can afford the new mortgage, if not we can look at JBSP), wait till legally married and we are free to transfer the properties between us. With interest rates where it is, the actual tax savings would probably be minimal..

          Comment


            #6
            Originally posted by wangw View Post

            yeah it is a good question. as it will be a BTL so will just be the usual BTL prudent tests, hopefully just a question of can the rent cover the amount we want to borrow. I think some banks may not be willing to lend to her if she has no other main residence (i.e. HSBC has this rule).

            I was more worried to what cost base (given she got it for nil consideration) can she rely on the mortgage interest relief.
            Just watch out she doesn't leave you as soon as the transfer is complete ................

            Comment


              #7
              As an unmarried couple, you might be better off owning all of the property on a joint basis, as you can simply tell HMRC how you plan to split the income between you.

              Talk to an accountant.
              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

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