How do you split and avoid stamp duty and CGT?

How do you split and avoid stamp duty and CGT?

8:22 AM, 12th October 2017, About 7 years ago 3

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I have a friend whose relationship with her partner has broken down.

They never married, but have a couple of kids and bought their buy to let houses in joint names with mortgages. There is about 5-10% equity across the properties.

They want to split the portfolio and transfer them equally into the respective parties names, subject to lender consent.

She has a number of questions:

1) Will lenders be happy for the removal of one party from the mortgage?
2) Will there be stamp duty or CGT implications in the transfer of ownership from joint to single names?
3) If there are tax implications, can these be mitigated?



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Neil Patterson

8:31 AM, 12th October 2017, About 7 years ago

Hi Glenn,

I would recommend a divorce lawyer for expert and insured advice.

However, a lender's security is joint and several between the two parties. Therefore, if you take one borrower off you are negatively affecting the level of the lender's security.

To take one borrower off the mortgage it will be assessed against criteria and credit scored in the same way a brand new application would in sole names. This may be fine, but obviously depends on circumstances we do not have the details to.

There is no CGT between spouses, but there is Stamp duty if there is a mortgage involved.

In order to assess tax implications you would need to know all of personal circumstances, income, investments etc and this would not be appropriate in open forum and is a bit of an open question.

Samantha Butcher

13:48 PM, 12th October 2017, About 7 years ago

Hi Glenn,

As they aren't married then HMRC will regard any changes in ownership as being taxable. So the removal of one party to the mortgage will trigger SDLT on half the mortgage. There will be CGT as well as the transfer is a disposal by one co owner.

If they are a partnership however the answer is different - No CGT and, provided he withdraws only his share of the capital, no SDLT either.


20:53 PM, 16th October 2017, About 7 years ago

As there is only 5% equity across the portfolio currently, it is unlikely that they have increased in value from the initial purchase, unless they have been remortgaged.
Also note that if the mortgagee changes, the banks will likely want to reassess affordability on each.

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