Transfer of Property
Discussion
I have a scenario where I own a property with an exceptionally small mortgage (<10% LTV), which is my main residence.
I’m looking to transfer this property to a family member, who has the ability to pick up the mortgage (or at least get a new mortgage on the outstanding amounts if required). They have no primary residence, and this will become their primary residence.
Via the transfer, what are the tax implications involved? Would I be liable to pay CGT, or would they be liable for any stamp duty costs?
I’m looking to transfer this property to a family member, who has the ability to pick up the mortgage (or at least get a new mortgage on the outstanding amounts if required). They have no primary residence, and this will become their primary residence.
Via the transfer, what are the tax implications involved? Would I be liable to pay CGT, or would they be liable for any stamp duty costs?
SSG1000 said:
I own a property with an exceptionally small mortgage which is my main residence.
At this point you have no CGT liability on that property however you dispose of it (assuming it's been your main residence throughout). Where are you going to live next? This is a big question. N.B. "gifts with reservation of benefit".
Transfer = what? Gift or sale?
If it's a sale, SDLT is payable on the total price.
If it's a gift, SDLT is only payable on the amount of the mortgage.
If it's a sale at an undervalue, it's a gift of the difference.
Any element of gift will be a Potentially Exempt Transfer (7 yrs) for IHT.
The property in question has been my main residence since purchase.
The transfer of the property will be a full gift, no reservation of benefit etc. I’ll be renting for the foreseeable future noting that I’ll ultimately be shifted abroad for work.
Not sure if the above changes things?
The transfer of the property will be a full gift, no reservation of benefit etc. I’ll be renting for the foreseeable future noting that I’ll ultimately be shifted abroad for work.
Not sure if the above changes things?
Nope, sounds remarkably straightforward to me.
What you need to be alert to is the "value" of the gift, not just for your IHT purposes but also in case she later rents out the house, thus entering the world of CGT where she would need to have a "base value". This would be the market value at date of gift. It's well worth getting a sensible assessment of that right now, both for IHT and CGT. I don't mean a paid-for RICS valuation but at least guidance on potential selling price from 2 or 3 estate agents and stick it in a file. These things are simple in real time but awkward if you have to try to do it several years after the event.
What you need to be alert to is the "value" of the gift, not just for your IHT purposes but also in case she later rents out the house, thus entering the world of CGT where she would need to have a "base value". This would be the market value at date of gift. It's well worth getting a sensible assessment of that right now, both for IHT and CGT. I don't mean a paid-for RICS valuation but at least guidance on potential selling price from 2 or 3 estate agents and stick it in a file. These things are simple in real time but awkward if you have to try to do it several years after the event.
Panamax said:
Yes, just get a conveyancer to look after it for you. Should be very straightforward.
We looked into doing this recently, and solicitor said they couldn't act for both gifter and recipient to the transaction so we'd need TWO conveyancers, just for a simple gift transfer. They also wouldn't act if the other party was handling conveyance themselves. Panamax said:
What you need to be alert to is the "value" of the gift, not just for your IHT purposes but also in case she later rents out the house, thus entering the world of CGT where she would need to have a "base value". This would be the market value at date of gift.
This. You'd need a valuation in case gifter dies within 7 years too. (or if it ceases to be primary residence for any other reason, not just renting)SSG1000 said:
Great reference point thank you. Does the person receiving the gift also need to appoint their own conveyancer?
In my case the same conveyancor dealt with the entire transaction on my behalf and my daughter who received the gift. It may have been more straightforward in my case because there wasn't a mortgage on the property. As I stated previously, this has the added benefit of meaning that it doesn't incur SDLT. This might be something to think about l, especially because your mortgage is such a low percentage of the value.BAMoFo said:
In my case the same conveyancor dealt with the entire transaction on my behalf and my daughter who received the gift. It may have been more straightforward in my case because there wasn't a mortgage on the property. As I stated previously, this has the added benefit of meaning that it doesn't incur SDLT. This might be something to think about l, especially because your mortgage is such a low percentage of the value.
Super thank you. I think in that case we’ll need to appoint conveyancer on both sides. Property value is £700k relative to a £80k mortgage, so will have to arrange for a new mortgage to come into play. Luckily the value is so low no SDLT will need to be paid… Gassing Station | Finance | Top of Page | What's New | My Stuff