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B2L ownership (CGT/SDLT)
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Raj K
Posted: 12 September 2024 12:53:22(UTC)
#13

Joined: 22/04/2016(UTC)
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Rookie Investor;318839 wrote:
I did a transfer of equity from my sibling to me (50% share transferred to me). There was also a mortgage on it. Apart from the solicitor fees and some minor lender admin fee, there was no other costs, certainly no SDLT or CGT. It happened 6 months after we bought the property. Value close to £600k. This was back in 2016.



I guess no CGT as potentially no gain in those six months? The SDLT would have depended on what the mortgage value was and half of that would have been the consideration to take into account for SDLT purposes. In 2016 there was a nil rate band for values below £125000. The additional home penalty was introduced in April 2016.

What may have been applicable in your case as it was for me way back in 2012 when another share of a property was transferred to me , is that the property was effectively being held in trust for me. ( I was the only one receiving income and managing the property) For my case it meant I paid no SDLT and there was no CGT liable by disposer. HMRC were okay with that .

Of course I will be liable for the full CGT when I do sell.
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Rookie Investor on 12/09/2024(UTC)
Rookie Investor
Posted: 12 September 2024 13:02:57(UTC)
#14

Joined: 09/12/2020(UTC)
Posts: 2,087
Raj K;318842 wrote:
Rookie Investor;318839 wrote:
I did a transfer of equity from my sibling to me (50% share transferred to me). There was also a mortgage on it. Apart from the solicitor fees and some minor lender admin fee, there was no other costs, certainly no SDLT or CGT. It happened 6 months after we bought the property. Value close to £600k. This was back in 2016.



I guess no CGT as potentially no gain in those six months? The SDLT would have depended on what the mortgage value was and half of that would have been the consideration to take into account for SDLT purposes. In 2016 there was a nil rate band for values below £125000. The additional home penalty was introduced in April 2016.

What may have been applicable in your case as it was for me way back in 2012 when another share of a property was transferred to me , is that the property was effectively being held in trust for me. ( I was the only one receiving income and managing the property) For my case it meant I paid no SDLT and there was no CGT liable by disposer. HMRC were okay with that .

Of course I will be liable for the full CGT when I do sell.


Ok that makes sense because the mortgage amount was less than £250k so half would be less than the £125k.

Do you know why it is only the mortgage part that is considered for SDLT? Because that is the economic transfer of value from my sibling to me? I didn't pay my sibling anything for the transfer, but had I have done, would that part need to be paid SDLT on as well?
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Raj K
Posted: 12 September 2024 13:10:21(UTC)
#15

Joined: 22/04/2016(UTC)
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Rookie Investor;318844 wrote:
Raj K;318842 wrote:
Rookie Investor;318839 wrote:
I did a transfer of equity from my sibling to me (50% share transferred to me). There was also a mortgage on it. Apart from the solicitor fees and some minor lender admin fee, there was no other costs, certainly no SDLT or CGT. It happened 6 months after we bought the property. Value close to £600k. This was back in 2016.



I guess no CGT as potentially no gain in those six months? The SDLT would have depended on what the mortgage value was and half of that would have been the consideration to take into account for SDLT purposes. In 2016 there was a nil rate band for values below £125000. The additional home penalty was introduced in April 2016.

What may have been applicable in your case as it was for me way back in 2012 when another share of a property was transferred to me , is that the property was effectively being held in trust for me. ( I was the only one receiving income and managing the property) For my case it meant I paid no SDLT and there was no CGT liable by disposer. HMRC were okay with that .

Of course I will be liable for the full CGT when I do sell.


Ok that makes sense because the mortgage amount was less than £250k so half would be less than the £125k.

Do you know why it is only the mortgage part that is considered for SDLT? Because that is the economic transfer of value from my sibling to me? I didn't pay my sibling anything for the transfer, but had I have done, would that part need to be paid SDLT on as well?


The consideration would also include any cash paid for the purchase of your share, but if you did not pay your sibling any cash to purchase their half then it’s only the mortgage ( half the value) your taking on that is the consideration for SDLT.
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Rookie Investor on 12/09/2024(UTC)
Tom Mozy
Posted: 12 September 2024 14:50:44(UTC)
#11

Joined: 09/07/2013(UTC)
Posts: 424
jonathan rowe;318820 wrote:
Have you considered a ltd company?

You can offset full interest as an expense and tweak ownership via issuing new shares

Downside is stamp on full amount, need to prep accounts/returns plus higher BTL mortgage rate ... although they seem to be getting better



Yeah I don't fancy paying a huge lump in SDLT putting into a company but thanks for that input.

We want to sell anyway in a couple of years so math doesnt stack putting into a Ltd company.

Moving the equity split to 50/50 to reduce tax to basic rate and then I will stop paying extra student loan payments on my Self assessment. Want to start a family also so wifey may not even earn the personal allowance!
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Tom Mozy
Posted: 12 September 2024 14:53:02(UTC)
#9

Joined: 09/07/2013(UTC)
Posts: 424
Newbie;318807 wrote:
I did something similar back in 2020

Like yourself our house was in my name alone and had a £350k mortgage on it.
If I was to transfer to her then we would have needed to get approval from the mortgage (maybe even re-apply for a new one) and also pay stamp duty.
Upon advice, we decided to clear the mortgage in full.
Then I gifted her 50% of the property using TR1 form with Nil Consideration.
That way not stamp duty.
We then remortgaged for £800k (cheap access to monies)
I would suggest that you also talk to a tax specialist as well as solicitor as it was our tax advisers who suggested this whereas the solicitor was more focused on the TR1 form and gift deeds etc (the latter it turned out was not needed as per se as information and certain aspects relating to bankruptcy were input into the TR1)



Great advice - no liquidity to clear the mortgage so will pay the £770 odd SDLT.

Next stop phone the mortgage provider and see wifey can join me in debt :)
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Newbie on 12/09/2024(UTC)
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