This sounds too easy

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    This sounds too easy

    Hii all

    Is this possible please:

    Background:

    I have two BTL's in just my name. One I wish to sell anyway
    My partner (we're not married) doesn't currently work so we're not using her tax free allowance

    Idea:

    - Sell the BTL that I want to get rid of
    - With that money, pay off the BTL which is just in my name
    - Gift half of the paid off BTL to my partner
    - Then we have 50:50 ownership, and we can do a Tenants in Common Agreement so she earns 95% of income, so basically maxes out her tax free allowance

    Then..... this is the important bit

    - re-mortgage the paid off BTL to free up as much cash as possible to buy another (in joint names again, we do another tenants in common agreement so she only pays 20% tax on that income)

    So we end up with two BTL's again, but both in joint names. We save £6-7k a year tax doing this going forwards, which adds up.

    Obviously we have to pay the extra 3% stamp duty for the new BTL we buy, but that's going to happen anyway as we want to sell one BTL and buy another closer to the main one we're keeping...

    In terms of capital gains for my partner, as half the house has been gifted, then if we ever sell, I don't believe we suddenly incur any higher CGT than if I'd kept it just in my name? Or do we?

    And will mortgage interest rates be as good if freeing up cash from a property I own outright?

    And do I even need to gift her half? Can I gift her less than that and still do a tenants in common split of 95%/5% for example?

    Many thanks

    #2
    I assume the answer is going to be 'get married and it'll all be easier tax-wise'

    Comment


      #3
      I think you have answered your own question

      But it would be interesting to read some more legal minded replies!

      Comment


        #4
        When you gift the BTL to your partner it's a disposal for tax purposes, so tax is due as if it were being sold at market value.
        That's not neccessarily the end of the world, but it does mean that it isn't free.

        Your ownership percentages and income split need to be the same.

        Being married would change the above.

        If you ever lived in any of the properties, some allowances might be affected by the changes.
        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


          #5
          Many thanks

          So if we're married its basically much easier/more effective? And all the above is then valid?

          Comment


            #6
            Married couples can gift property to each other tax free and can decide the proportions of ownership by a trust.

            There are other financial implications of getting married you would need to consider in parallel and it's possible to transfer property over time to reduce/minimise the tax costs.
            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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