Transfer of Equity on Buy to Let Property

geepops

I have 2 different mortgages on 2 different properties. Property 1 a joint mortgage with joint ownership with my partner and is my main full time residence. Property 2 is sole buy to let mortgage and sole ownership in my name only. My question is what are the tax/cost implications of transferring 50% of Property 2 over to my partner so we essentially own both of the properties jointly.

Property 2 was bought for 80k with a 20k cash deposit so therefore has a 60k outstanding mortgage balance. The sale completed on 31st March 2016 before the additional 3% stamp duty levy.

Am I correct in saying that as the value of the property is above 40k that we would incur a 3% tax charge on 80k value of the flat if I were to organise the transfer to both names?

Pixie5740

Is your partner a spouse or a civil partner?

geepops

Neither! We are basically long term partners but no legal binding exists

booksurr

SDLT is based on chargeable consideration. Making an unmarried "partner" a co owner therefore comes down to how much outstanding mortgage liability will the new person "take on" as that liability is associated with whatever share of the property you give him. Presumably no actual cash will change hands.

Equity is not chargeable consideration

So make him 50% joint owner with a joint mortgage the rule is if half the o/s mortgage is >40k then yes the partner will be liable for higher rate SDLT as s/he is already an owner of a property and so will be going from 1 to 2

presumably you are also aware that you will be making a part disposal for CGT purposes and so could end up having to pay CGT (based on market value) depending on how much relief you have available