Transfer of property between spouses

by Readers Question

22:50 PM, 25th May 2017
About 2 years ago

Transfer of property between spouses

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Transfer of property between spouses

Can anyone please assist with this scenario? 

I am looking to transfer a mortgaged property held in my sole name, to my wife. The property currently has a first and second charge mortgage on it, and a new mortgage would be required to be taken out in my wife’s sole name to redeem the current liabilities. It would essentially be purchased at market value.

1) Assuming a 75% LTV loan on a new mortgage in my wife’s sole name, would a lender consider my “gifted” 25% equity as part of the transfer for the deposit?
2) Would CGT and SDLT be payable in this scenario?

Thanks

Andy



Comments

Mark Alexander

22:55 PM, 25th May 2017
About 2 years ago

Hi Andy

There is no CGT payable on transfers between spouses.

There is no SDLT to pay on gifts between spouses, however, transferring a mortgage is not a gift. Therefore, SDLT would be payable on that amount as a consideration.

Some lenders MIGHT consider the 25% gift as a deposit, but I suspect most wouldn't so you might not get optimal terms.

Presumably you are considering this for tax purposes? If so there is a far simpler option. Please see https://www.property118.com/declaration-of-trust/93073/
.

andy p

21:25 PM, 26th May 2017
About 2 years ago

Hi Mark

Thank you for the clarification regarding CGT and SDLT. We'll have to clarify this gifted deposit arrangement with a broker then.

It's not actually an arrangement for current income tax or onward Sec 24 liabilities, so the declaration of trust ( although an attractive option in those circumstances ) wouldn't actually apply.


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