Year of Separation but how to split property

by Readers Question

10:15 AM, 30th July 2015
About 3 years ago

Year of Separation but how to split property

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Year of Separation but how to split property

My wife and I are divorcing and we want to transfer 3 rental properties from joint names into my name in return for a lump sum that I will pay her.seperation

I believe we have to do the transfer in the year of separation otherwise a CGT would be payable.

What is involved in the process of transfer?

The properties are owned in joint names and the mortgages are in joint names.

We are buying two new residential properties for us to live in, and that’s being financed by selling our main house, and remortgaging the BTLs. All this is going through now.

My wife needs to show the rental income to get her mortgage, so we can’t do the transfers of the BTLs to my name until she’s moved in. The houses we’re buying will be built around December 2015.

That would seem to leave us just 3 months of 2016 to do the transfers. Allowing for builder’s delays that will get shortened.

Does anyone know what’s involved in the transfer of the BTLs to me?

a) Does my wife’s name have to come off the mortgage, and the Land registry have changed the Deeds? or…

b) Can it be just a signed legal document saying ‘They are transferred’ and we can do the above in slower time?

c) I believe that just because we will be living in separate houses doesn’t mean we’re separating, so we could move in to our houses and then do the ‘separation’ next FY?

Thanks everyone and have a great summer (when it comes).

Peter



Comments

Neil Patterson

15:12 PM, 30th July 2015
About 3 years ago

Hi Peter,

The lenders will see it as a new loan in your sole name and will want the deeds registered in your sole name with their first legal charge.

I recommend you chat with our friends at Hawkins Ryan to help you with the legal side.

Please see >> http://buytoletconveyancing.co.uk/contact-us/

Peter Brown

8:19 AM, 31st July 2015
About 3 years ago

Thank you Neil.

IAN GOULDSBROUGH

9:52 AM, 31st July 2015
About 3 years ago

Neil is correct but to avoid SDLT, I believe you can make a gift transfer with nil consideration together with a declaration of trust but having a mortgage complicates the process. Would be interested in Hawkins' views using this route.

Chris Wheelwright

11:19 AM, 31st July 2015
About 3 years ago

You can transfer the equitable interest in the properties in the year of separation by means of a Deed of Trust. Your wife will thereby retain a legal interest (as trustee) which means you do not need to change the mortgage until you wish to at some future date.
As the equity will already have been transferred there will be no SDLT however long the gap may be.
I would suggest that you do use a solicitor to draw up the trust deed.

Peter Brown

14:27 PM, 31st July 2015
About 3 years ago

Ian and Chris. Thank you for taking the time to respond to my issue. Really appreciate it and have passed everything to a Tax Lawyer in meeting with on Tuesday.

Have a great weekend.


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