Gifting property share with hubby but avoiding SDLT

by Readers Question

9:01 AM, 7th July 2017
About A year ago

Gifting property share with hubby but avoiding SDLT

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Gifting property share with hubby but avoiding SDLT

My husband and I own 6 houses, 4 are in joint names, 2 are in my sole name only. I work part time and my husband is retired so we are relatively low earners.

Even with our rental income we are well below the higher level tax bracket. We are looking to buy another property and need to raise the equity in one of the houses in my sole name.

Due to my income, it’s better to remortgage in joint names, but we want to avoid SDLT. We are getting mixed messages from solicitors and tax advisers.

Is the best thing to do pay off the current mortgage completely, gift my husband half the share of the house and then remortgage it in joint names?

One person has suggested the above would avoid SDLT.

Another has suggested that we need to pay off the mortgage to below £80,000 ( someone else said £40,000) but if we remortgage my hubby would be liable for SDLT on the new mortgage amount.

A third has suggested we pay SDLT on the difference between the new mortgage and the old.

Your advice is much appreciated.

Karen



Comments

Neil Patterson

9:33 AM, 7th July 2017
About A year ago

Hi Karen,

First and easiest answer is that a few lenders do not have minimum income criteria if you already own property so this may be an immediate no changes required option. You would need to go through a full fact find and whole of market search though with a broker/IFA to confirm options that are available to you.

There is no CGT between spouses, but there is SDLT if there is a mortgage on the property hence the advice to pay the mortgage off first. However SDLT is only triggered if the percentage you are transferring means that you are also transferring more than £40,000 of the mortgage debt which is where SDLT is triggered.

However, this kind of tax advice needs to be given by a qualified and insured accountant who can take all of your tax affairs into consideration as none of these questions can be considered totally in isolation.

If you are able to pay off the entire current mortgage could you not just use those funds as a 25% deposit on the new purchase and just have a joint BTL on the new property?

I am not a qualified accountant so please do not act upon any advice without checking it first with your accountant.

Puzzler

10:03 AM, 7th July 2017
About A year ago

A new property would incur the SDLT though

Karen Arnold

21:07 PM, 8th July 2017
About A year ago

Thank you for your assistance. I thought it would be a good idea to also add my husbands name onto the existing property so that if & when we came to sell it we had 2 lots of CGT allowance.
The property we are buying is a new home for us & a lot more expensive than the mortgage we are paying off/remortgaging.
I will carry on waiting for my accountant to get back to me, but thank you for suggesting about their insurance.
Karen


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