Newly Weds

hotdog123_2

I have just married and am looking to do a Let To Buy.

Right now, I will have 1 property that my wife and I live in and this has a mortgage.

I would like to end up in a situation where I have 2 properties and 2 mortgages (1 of which will be a Buy To Let).

I would like to release equity from the property I currently own so it can be used as deposit for a new property to live in whilst converting the property I currently own and live in into a Buy To Let holiday/short-let property.

Ownership of the Property

My wife currently has no income so she has unused tax allowance. Once I have a Buy To Let property, could I then gift this property to my wife so she can use up her allowance? For example, if the Buy To Let property is worth £300 000 and I would have 25% equity in it (£75 000) then what are the implications? How would I go about gifting the property?

Keeping the mortgage liability?

Could I gift the property 100% to my wife yet keep all the liability of the mortgage for myself so that there was no consideration in the transaction? Would the mortgage company allow this? Even if it was allowed, would this then cause another issue - my wife would not be able to deduct mortgage interest costs from any rental received?

Mortgage Company Problems?

If I want to gift all or part of the property, would I need to get the mortgage company to agree to the transfer?

Is Part Ownership the Answer?

Or, should I just gift part of the property (a token amount to ensure that the "consideration" is below SDLT threshold) and then fill out HMRC Form 7 and use a Declaration of Trust to say that she should receive all of the rent? In this case, would she be able to deduct all mortgage payments and other qualified deductables from the rental before tax? Again, is the mortgage company likely to need my wife to have income besides the buy to let property?

Any advice would be great!

CLAPTON

in general, you can't change the ownership of a mortgaged property without the consent of the lender.


you can, in general, get a joint mortgage and own the property jointly even if your wife has no income

hotdog123_2

OK - thanks.

I'll try and speak to the lender to find out more then. Sounds like the way forwards is likely to be a joint mortgage on the Buy To Let property and then I fill in a Form 7 to state the income split and then provide a Declaration of Trust then...