Stamp duty / capital gains house transfer

TestZed

Husband owns property worth 250K outright (bought at 150K), always rented out

Couple are going to buy a new property for 300K in joint names, wife's parents will pay for it outright and the wife will pay them back monthly

Husband would transfer half his existing property (125K) to wife's name, and pay 25K to parents-in-law instantly so that he owes them nothing

Is this transfer reportable to HMRC for stamp duty (even if none due as transfer worth 125K)? Would husband have to pay CGT on 100K? What if he only values his property at original price paid, and pays the parents-in-law 125K?

booksurr

so House B costing 300k is being paid for by cash "loaned" to husband and wife by parents in law with 50/50 ownership resting with husband and wife. PIL have no stake in house B?

It appears they want their daughter to repay them 150k cash (by monthly instalments)

They want the husband to "repay" the 150k he owes them by making their daughter the owner of an asset (House A) "worth" 125K, plus giving PIL a cash settlement of 25K for the remaining balance he owes to PIL.

Husband therefore has his personal worth reduced by 150k and wife owes her parents 150k debt.

PIL net worth is reduced by the 125k they do not get back as cash. That 125k counts as a partially exempt transfer ("PET") for PIL's inheritance tax purposes, and the balance of the 150k debt owed by wife also counts as part of PIL's estate for their IHT.

SDLT
don't know!

CGT
Husband has never lived in House A so it is liable for CGT on disposal by him. But, transfers between husband and wife are not classed as disposals, so he does not have to pay any CGT at point of transfer. Instead, wife acquires her 50% share of House A at half of the original cost paid by husband, ie wife becomes 50% owner of House A with a cost of 75K. As House A is now worth 250K, if they were to now sell it, husband would have a CGT gain of 250/2 - 75 = 50k. Wife would have the same 50k gain. But that is for the future as no CGT is currently payable and arguments over whether it is worth 250k now are irrelevant.

Income tax
as they are now co-owners of House A each will be liable for income tax on 50% of the rental profit from House A unless they actually own in unequal shares and register a Form 17 with HMRC confirming that split