Discussion
I need to transfer some equity in a property to share a CGT liability (avoidance not evasion 
) .
My Mortgage is with the C&G and they won't allow me to do a straight transer of equity. They require me to close off the new mortgage and jump through hoops for a new mortgage including legal fees...(tell tell me its a FSA requirement but according to the CML Handbook other lenders seem to still allow the transfer)
Does anyone have any experience of whether the Inland Revenue will accept a Declaration of Trust to enable the CGT sharing to take place?
) . My Mortgage is with the C&G and they won't allow me to do a straight transer of equity. They require me to close off the new mortgage and jump through hoops for a new mortgage including legal fees...(tell tell me its a FSA requirement but according to the CML Handbook other lenders seem to still allow the transfer)
Does anyone have any experience of whether the Inland Revenue will accept a Declaration of Trust to enable the CGT sharing to take place?
Piglet said:
Does anyone have any experience of whether the Inland Revenue will accept a Declaration of Trust to enable the CGT sharing to take place?
Can't answer legally your mortgage query, but C&G sound like they're trying to sting you with the current interest rates. Keep pushing them.
Although you may reduce you CGT liability, do you not have to pay Lifetime Tax on the Declaration of Trust? I could be wrong though.
Piglet said:
What's Lifetime Tax?
Lifetime tax is basically inheritance tax charged on money put into Discretionary Trusts whilst the Trustor is still alive. Its charged at 20%, and is payable six months after the funds are transferred. It may not apply in this case, I'm not very experienced with IHT, but just thought it may be something to check out before going ahead. I'm sure someone will be along with the an authoritative answer!
Thanks Eric, I'm planning to sell the property in the next tax year, so I need to get the equity transfered to H to spread the CGT using both of our allowances when I sell the place.
C&G won't play ball so I can't do this by means of a transfer - do you know if the Inland Revenue accept a Declaration as Trust as the transfer of ownership to H in this tax year?
C&G won't play ball so I can't do this by means of a transfer - do you know if the Inland Revenue accept a Declaration as Trust as the transfer of ownership to H in this tax year?
Can't help with the legal part (not my field!) but I recently had to do a transfer of equity after getting married to put my house into joint names. Nationwide didn't treat it in the way you describe C&G claim they have to.
The only potential tax issue was SDLT - which from memory was assessed on the half of the mortgage debt the transferee took on, rather than half of the total value of the property. It didn't, and doesn't, make any sense to me as to why they work it out n that basis but I was assured that's how they asses it. In the event, it wasn't an issue for us as it was safely sub-£120K but it might be worth bearing in mind.
The only potential tax issue was SDLT - which from memory was assessed on the half of the mortgage debt the transferee took on, rather than half of the total value of the property. It didn't, and doesn't, make any sense to me as to why they work it out n that basis but I was assured that's how they asses it. In the event, it wasn't an issue for us as it was safely sub-£120K but it might be worth bearing in mind.
Eric Mc said:
And I have to say that IHT and SDLT are not within my normal tax experience either.
It does seem that C&G are being rather obstructive. Why not change to a more flexible mortgage lender?
It does seem that C&G are being rather obstructive. Why not change to a more flexible mortgage lender?
The SDLT is fine, I've checked that and we are inside the figures. There aren't any immediate IHT issues either.
Eric - I understood that I need to effect the transfer in this tax year if we are to use OH's CGT allowance for this year as well as next years? Is that correct? If so I don't have time to remortgage and sort it...
Transfers of assets between spouses who are living together are not subject to Capital Gains Tax. Therefore, since no CGT arises, the question of making use of the CGT Annual Allowance doesn't arise either on that initial transfer.
Obviously, once the transfer has been made, a subsequent disposal of the asset will trigger a CGT calculation, which will take into account the CGT annual allowance for both spouses.
Obviously, once the transfer has been made, a subsequent disposal of the asset will trigger a CGT calculation, which will take into account the CGT annual allowance for both spouses.
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