Transfer of ownership - Unmarried Couple

boxrick

I currently jointly own 2 properties with my long time girlfriend. When we most recently moved we were forced to rent out our old house due to a dropping value so we were left with a lemon we decided to sit on.

Around 18 months ago we purchased a second property which is where we now live. My ultimate plan was to purchase something nearby, spend some years making it livable then move in and get rid of one of the two houses.

So we currently own 2 properties and I wish to buy a third which I will spend some time renovating. Recently though it seems that the chancellor has decided to make some drastic stamp duty changes which make my plans rather unaffordable. Id like to try and avoid this if possible since ultimately I'm not doing this to rent somewhere but rather to make my dream home.

So simply put:

Property 1: Value 95k ish - remaining mortgage 7 years with around 50k left to pay.
Property 2: Value 180k ish - remaining mortgage 22 years with 150k to pay

1) Can I transfer these properties to my girlfriend so they are 100% in her name.
2) Would a transfer of the above properties attract any tax if no money is passing hands.
3) Would my lendor need to be notified or is a remortgage likely?
4) Assuming no properties were no longer in my name, could we avoid this 3% new tax if just I was purchasing?

Thanks for any help guys

AdrianC

boxrick wrote: »

I currently jointly own 2 properties with my long time girlfriend. When we most recently moved we were forced to rent out our old house due to a dropping value so we were left with a lemon we decided to sit on.

Around 18 months ago we purchased a second property which is where we now live. My ultimate plan was to purchase something nearby, spend some years making it livable then move in and get rid of one of the two houses.

So we currently own 2 properties and I wish to buy a third which I will spend some time renovating. Recently though it seems that the chancellor has decided to make some drastic stamp duty changes which make my plans rather unaffordable. Id like to try and avoid this if possible since ultimately I'm not doing this to rent somewhere but rather to make my dream home.

So simply put:

Property 1: Value 95k ish - remaining mortgage 7 years with around 50k left to pay.
Property 2: Value 180k ish - remaining mortgage 22 years with 150k to pay

1) Can I transfer these properties to my girlfriend so they are 100% in her name.
2) Would a transfer of the above properties attract any tax if no money is passing hands.
3) Would my lendor need to be notified or is a remortgage likely?
4) Assuming no properties were no longer in my name, could we avoid this 3% new tax if just I was purchasing?

Thanks for any help guys

Quoted for posterity, because I don't think you're going to like the consensus opinion here.

Yes, you can gift those properties to your partner. But you will be gifting them in entirety. If she leaves you, she takes the houses with her. You may be liable for CGT on the transfer. She would need to take mortgages out in her sole name for them, since she would be the sole owner - is she able to do that?

If 3% on the purchase price of your "dream home" makes it unaffordable, then your renovation budget is nowhere NEAR adequate, and you are heading for serious issues.

You have plenty of equity in the cheaper property - presumably the rental. Sell it. You make no mention of the income from it, but I suspect it's not substantial once costs have been accounted for. You're going to need all the time, effort and money you can get for this refurb project, and that can only come at the expense of your tenants.

gingercordial

boxrick wrote: »

Id like to try and avoid this if possible since ultimately I'm not doing this to rent somewhere but rather to make my dream home.

The new SDLT charge isn't intended to punish buy-to-let landlords. It is intended to encourage people who own multiple houses to let the extras go (by making it more expensive if they don't) which will release those extras back into the market, increase supply and stop prices running rampant. The new law is therefore entirely aimed at you and your situation I'm afraid.

Derboy

1) Can I transfer these properties to my girlfriend so they are 100% in her name.

No. See (3)

2) Would a transfer of the above properties attract any tax if no money is passing hands.

Yes. It's still a transaction via a new mortgage. She would be liable.

3) Would my lendor need to be notified or is a remortgage likely?

Remortgage

4) Assuming no properties were no longer in my name, could we avoid this 3% new tax if just I was purchasing?

Yes you could but she would liable for the properties you "sold" to her.

boxrick

Thanks for the feedback guys, I appreciate anything given.

AdrianC wrote: »

Quoted for posterity, because I don't think you're going to like the consensus opinion here.

Its not really a question of liking or not liking, I need to weigh up the options and do this in the most tax sensible way which allows me to achieve my goals and doesn't put my tenants at any risk or hassle.

AdrianC wrote: »

Yes, you can gift those properties to your partner. But you will be gifting them in entirety. If she leaves you, she takes the houses with her. You may be liable for CGT on the transfer. She would need to take mortgages out in her sole name for them, since she would be the sole owner - is she able to do that?

Don't really care about this if we were ever to split, honestly she could have everything if she so desired. It wouldn't ever go that way though.

AdrianC wrote: »

If 3% on the purchase price of your "dream home" makes it unaffordable, then your renovation budget is nowhere NEAR adequate, and you are heading for serious issues.

You have plenty of equity in the cheaper property - presumably the rental. Sell it. You make no mention of the income from it, but I suspect it's not substantial once costs have been accounted for. You're going to need all the time, effort and money you can get for this refurb project, and that can only come at the expense of your tenants.

So the 3% doesn't make it unaffordable, but obviously makes it more difficult. I don't have the outlay to just instantly re-do the house, this would be a long term thing of a good few years with me doing much of the work myself as time and money allow.

My rental property wasn't particularly out of choice, I have a 10 year fix which I am stuck in unless I pay the Early Repayment Charges. I previously lived here with the intent on staying for a good number of years ( hence the long term fixed mortgage ). Did this property up to a decent standard then simply moved out and left it to ex house mate.

It doesn't generate good income, it is infact a liability and costs me each month to maintain. The area is poor, house prices have dropped and unfortunately I was stuck in the rutt of keeping this. I now also enjoy tax on the income, but fortunately since it generates practically nothing it doesn't cost me anything in tax.

If anyone could offer some suggestions to help me out of my situation that would be handy. I am currently considering the option of passing full ownership of each property to a single one of us and seeing if the building society would allow for a transfer without the Early Repayment Charge. Since we would both now own only 1 property and the mortgage values are well below the stamp duty threshold this would mean that Stamp Duty would be avoided.

Then there is the other matter of capital gains for the 18 months I have not lived at the old place....

The joys of houses.

marksoton

boxrick wrote: »

Thanks for the feedback guys, I appreciate anything given.



Its not really a question of liking or not liking, I need to weigh up the options and do this in the most tax sensible way which allows me to achieve my goals and doesn't put my tenants at any risk or hassle.



Don't really care about this if we were ever to split, honestly she could have everything if she so desired. It wouldn't ever go that way though.



So the 3% doesn't make it unaffordable, but obviously makes it more difficult. I don't have the outlay to just instantly re-do the house, this would be a long term thing of a good few years with me doing much of the work myself as time and money allow.

My rental property wasn't particularly out of choice, I have a 10 year fix which I am stuck in unless I pay the Early Repayment Charges. I previously lived here with the intent on staying for a good number of years ( hence the long term fixed mortgage ). Did this property up to a decent standard then simply moved out and left it to ex house mate.

It doesn't generate good income, it is infact a liability and costs me each month to maintain. The area is poor, house prices have dropped and unfortunately I was stuck in the rutt of keeping this. I now also enjoy tax on the income, but fortunately since it generates practically nothing it doesn't cost me anything in tax.

If anyone could offer some suggestions to help me out of my situation that would be handy. I am currently considering the option of passing full ownership of each property to a single one of us and seeing if the building society would allow for a transfer without the Early Repayment Charge. Since we would both now own only 1 property and the mortgage values are well below the stamp duty threshold this would mean that Stamp Duty would be avoided.

Then there is the other matter of capital gains for the 18 months I have not lived at the old place....

The joys of houses.

You're exactly why the SDLT measures were brought in. Pay up or releases property.

Pixie5740

You can't just go transferring ownership of mortgaged properties and I'm pretty sure you can't just transfer a mortgage into someone else's name.

If you are replacing your main residence with another main residence then you can reclaim the additional SDLT if you sell what is your current main residence within 36 months of purchasing the new property. That would seem a lot simpler and more tax efficient than what you're proposing.

Stevie_Palimo

I bet many couples have said this before only to the split up and have a bitter dispute over who gets what.


Quote:


Originally Posted by AdrianC View Post

Yes, you can gift those properties to your partner. But you will be gifting them in entirety. If she leaves you, she takes the houses with her. You may be liable for CGT on the transfer. She would need to take mortgages out in her sole name for them, since she would be the sole owner - is she able to do that?

Don't really care about this if we were ever to split, honestly she could have everything if she so desired. It wouldn't ever go that way though.

AdrianC

boxrick wrote: »

My rental property wasn't particularly out of choice, I have a 10 year fix which I am stuck in unless I pay the Early Repayment Charges. I previously lived here with the intent on staying for a good number of years ( hence the long term fixed mortgage ). Did this property up to a decent standard then simply moved out and left it to ex house mate.

It doesn't generate good income, it is infact a liability and costs me each month to maintain. The area is poor, house prices have dropped and unfortunately I was stuck in the rutt of keeping this.

Sounds like a choice to me.

I now also enjoy tax on the income

Umm, good?

Then there is the other matter of capital gains for the 18 months I have not lived at the old place...

If it hasn't made a capital gain, then there's no CGT to be paid.

The joys of houses.

ITYM the joys of running a business and having to pay the taxes due on that business.

Enzocat

Hi,

If I could hijack this thread a little.

I am in a similar position. I own my house outright in my sole name, no mortgage. If possible I was thinking of gifting this to my fianc!e to then rent out. I would then buy another home in my name for us to move in to.

1) Can I do this without incurring any costs tax wise. (Apart from any future IHT due to the 7 year rule)

2) If I buy the new property will it avoid the extra property stamp duty.

3) If we marry at a later date, will any tax issue arise if we go ahead with the above?

Thanks.

LittleMax

boxrick wrote: »

My ultimate plan was to purchase something nearby, spend some years making it livable then move in and get rid of one of the two houses.

The rules allow for people buying a project and then moving in after it's refurbished to claim back the SDLT so long as you sell your current residence and move in within 3 years.

How much of a wreck are you planning to buy if it will take "some years" doing it up? This doesn't make any logical sense. I'm afraid I don't believe you.