Transfer of ownership and keeping another property
Discussion
Very amicable but unfortunatly my brother and his wife are divorcing. They have three properties. One is being sold (which is in joint names) and will complete hopefully the end of next week. This will realise a profit of 40k which they are going to use to pay off the mortgage on a second property (a flat and still in his sole name) and his soon to be ex wife will have ownership transfered into her name as part of the divorce settlement.
The third property which is in joint names and the matrimonial home, he is going to take the mortgage over and she will transfer ownership to him.
There are no tax issues with the sale of the first property, however he is worried that there may be a Stamp Duty issue with the flat or maybe his main residence because of the change of law for a higher rate being classed as a second home.
So my question is, would/could there be an issue?
Many thanks in advance and hope the above makes sense
The third property which is in joint names and the matrimonial home, he is going to take the mortgage over and she will transfer ownership to him.
There are no tax issues with the sale of the first property, however he is worried that there may be a Stamp Duty issue with the flat or maybe his main residence because of the change of law for a higher rate being classed as a second home.
So my question is, would/could there be an issue?
Many thanks in advance and hope the above makes sense
Eric Mc said:
Yes - there is an issue.
Not sure it's quite so clear-cut. From the following link (as given in another thread) https://www.gov.uk/guidance/sdlt-transferring-owne...link said:
You don’t pay SDLT if you transfer an interest in land or property to your partner as part of an agreement or court order because you’re either:
On the face of it, they might not have to pay SDLT but I would suggest that it would be prudent to invest in some professional advice.- divorcing
- dissolving a civil partnership
Sheepshanks said:
Might there not be a CGT liability?
As for transferring, the divorce thing would seem to put them in the clear anyway, but generally you can gift property without SDLT liability if you fully own it. If it's mortgaged then it gets messy.
According to his accountant no capital gains issue on the first property though I have no real idea why. I know his wife bought It around 20 years ago and for some reason it was empty for a long time before it went into joint ownership and rented it out. His accountant isn't up to speed it seems with the new laws and SD and how that alters things ... Or at least it seems it's a grey area on one or both of the others.As for transferring, the divorce thing would seem to put them in the clear anyway, but generally you can gift property without SDLT liability if you fully own it. If it's mortgaged then it gets messy.
I deleted my post anyway as the rest of it isn't really relevant to a divorcing couple. Without the divorce, swapping property in a single deal is messy as each party is effectively paying by using the value of their existing property.
On the face it, it's not obvious why there wouldn't be a CGT liability on the first property though.
On the face it, it's not obvious why there wouldn't be a CGT liability on the first property though.
Interesting - didn't know that. Gov website says,
Some land and property transactions are exempt from SDLT. You don’t need to tell HMRC about these. They include:
• transactions where no money or other type of payment changes hands [i.e. gifts. OzOs]
• property left to you in a will
• property transferred because of divorce or dissolution of a civil partnership
Some land and property transactions are exempt from SDLT. You don’t need to tell HMRC about these. They include:
• transactions where no money or other type of payment changes hands [i.e. gifts. OzOs]
• property left to you in a will
• property transferred because of divorce or dissolution of a civil partnership
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