Splitting title deeds and the potential tax implications?

Splitting title deeds and the potential tax implications?

11:20 AM, 29th April 2019, About 3 years ago 2

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I am looking to buy two properties which are currently under one title deed. I am looking to split the title deeds and sell one of the properties.

What additional stamp duty and capital gains issues do I have?

I intend to finance the purchase by bridging loan, split the title, then residential or buy to let mortgage on one of the properties to pay of the bridging loan.

Many thanks.

Phil



Comments

by Neil Patterson

11:25 AM, 29th April 2019, About 3 years ago

Hi Ian,

You will already have paid SDLT on the original purchase, which would likely be more than the two properties separately.

CGT will only come into it once you sell from the base cost of the original purchase, but I am not sure how they will work out the share if you split the property and only sell one down the line unless they are identical?

by Ian Narbeth

12:57 PM, 29th April 2019, About 3 years ago

Phil
You do not need to split the title until you sell and indeed you probably shouldn't try because you may want to grant and reserve easements, reserve rights to build notwithstanding interference with light, impose or give anti-nuisance restrictive covenants. You can't reserve rights over your own land.
You will have to pay the 3% additional SDLT on one or both properties (will either be your only home?). For CGT you will have to apportion the base cost between the two. If both are of similar size and condition then 50:50. Otherwise, you need a fair apportionment. Ask the mortgage valuer for their view.


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