Adding wife to Buy to Let: Stamp Duty...

roadweary

booksurr wrote: »

SDLT
- the property is mortgaged
- liability on a mortgage is joint and several. It is not based on underlying ownership shares
- the mortgage is 120k. so your wife is deemed to be liable for half of that even if she does not legally own half the peoperty
- the consideration given is therefore half of the o/s mortgage (60k)
- 60k is > the minimum threshold below which higher rate SDLT does not apply (40k) so she will need to pay SDLT on 60k (based on your figures)

Hi,

So am I right in saying there will be £1,800 to pay (3% buy to let rate)?

Am I also able to assign her 99% of the ownership (again, apologies, doing this on my phone but I believe this was the final option you presented (well my interpretation of it) such that 99% of the rental income is against her tax code?

Many thanks.

lovinituk

booksurr wrote: »

If it is tenancy in common you can vary that as follows:

2. for tax purposes income of married (not unmarried) legal owners must be split 50/50 UNLESS a declaration is made to register a different share

Which is what I have been saying, isn't it?

No hot air from my part - I am genuinely trying to sort this out in my head as it will affect what we do with my wifes flat.

booksurr

roadweary wrote: »

Hi,

So am I right in saying there will be £1,800 to pay (3% buy to let rate)?

Am I also able to assign her 99% of the ownership (again, apologies, doing this on my phone but I believe this was the final option you presented (well my interpretation of it) such that 99% of the rental income is against her tax code?

Many thanks.

yes SDLT is payable

yes if you do a declaration of trust as 99/1 and submit that with a Form 17 then she can take 99% of the profit, assuming it is already owned as TIC

you can alter it as many times as you want in the future as explained in the HMRC manual (when you get to read them off the phone )

lovinituk wrote: »

Which is what I have been saying, isn't it?don't know, I gave up skim reading after the first post that descended to a I said, you said pat-a-cake

No hot air from my part - I am genuinely trying to sort this out in my head as it will affect what we do with my wifes flat.

if the flat is only in her name and you are not an existing co-owner then adding you to it may have other implications re CGT - please confirm current ownership status of wife's flat

lovinituk

booksurr wrote: »

if the flat is only in her name and you are not an existing co-owner then adding you to it may have other implications re CGT - please confirm current ownership status of wife's flat

I'm ok with that side of it. It's the split of income for tax purposes that I wasn't sure about but you have confirmed that my understanding was correct.

roadweary

booksurr wrote: »

yes SDLT is payable

yes if you do a declaration of trust as 99/1 and submit that with a Form 17 then she can take 99% of the profit, assuming it is already owned as TIC

you can alter it as many times as you want in the future as explained in the HMRC manual (when you get to read them off the phone )

if the flat is only in her name and you are not an existing co-owner then adding you to it may have other implications re CGT - please confirm current ownership status of wife's flat

Hmm...so is there "consideration" because she is on the mortgage? If so, if I were to stay the only one on the mortgage, could I not gift her the equity in the house? As she wouldn't be on the mortgage there would be no stamp duty? But because I had gifted her the equity, I could still do the declaration of trust and assign 99% of the rental income to her? Probably not, but worth asking

kinger101

roadweary wrote: »

Hmm...so is there "consideration" because she is on the mortgage? If so, if I were to stay the only one on the mortgage, could I not gift her the equity in the house? As she wouldn't be on the mortgage there would be no stamp duty? But because I had gifted her the equity, I could still do the declaration of trust and assign 99% of the rental income to her? Probably not, but worth asking

The bank won't let you do it. The house is their security on the debt, so you can't just give away equity.

roadweary

kinger101 wrote: »

The bank won't let you do it. The house is their security on the debt, so you can't just give away equity.

This is where I'm confused. There appears to be separation between what a declaration of trust defines as ownership....and what happens on a mortgage.

I'm not aware that a declaration of trust goes anywhere near the mortgage lender?