Transfering property to avoid landlord stamp duty?

mmcgeady

Hi,

I am looking for a bit of advice regarding my current situation.

I currently have a flat that I rent out and I have never lived in it. I still stay with my parents.

My fiance and I tried to submit an offer for our first house together but I was informed I was liable to pay the 3% landlord stamp duty as I currently have another property. My partner doesn't earn enough to get the mortgage for our property on her own, however I would be able to.

Is there a way that I can transfer my flat that I have over to my fiance that would then allow me to buy the house that we want on my own and avoid paying the 3% stamp duty as this would then be my only property?

AnotherJoe

Are you married?

mmcgeady

No we currently are not getting married until March 2018

Pixie5740

Do you have a mortgage on the rental property? If so you won't be transferring it to anyone. If you own it outright then sure you can transfer the property to your partner (I'm assuming you're not married) to avoid paying the additional SDLT but then you might land yourself with a CGT bill instead. Back of the net.

The rental income would also become your partner's income and she would need to pay income tax on that.

mmcgeady

Yes I still have a mortgage outstanding on it. Would it be possible to do a concessionary purchase on it? I have read up a bit on them but I am still not 100% sure how that would work.

Pixie5740

As in sell it to your fianc! for just the amount of the outstanding mortgage balance so that you can clear the mortgage? Can she get a BTL mortgage for that amount?

gingercordial

mmcgeady wrote: »

Hi,

I am looking for a bit of advice regarding my current situation.

I currently have a flat that I rent out and I have never lived in it. I still stay with my parents.

My fiance and I tried to submit an offer for our first house together but I was informed I was liable to pay the 3% landlord stamp duty as I currently have another property. My partner doesn't earn enough to get the mortgage for our property on her own, however I would be able to.

Is there a way that I can transfer my flat that I have over to my fiance that would then allow me to buy the house that we want on my own and avoid paying the 3% stamp duty as this would then be my only property?

Ignore me, bad day!

mmcgeady

Yes that is exactly what I was thinking. Yes she would be able to get a BTL mortgage for the flat on her current income. If this would then mean having to pay the 3% stamp duty on this purchase then it would be considerably less than the house we were looking to buy so it could work out better for us.

Pixie5740

I suppose you could do that but depending on how much (if at all) the property has risen in value then you might still be hit with a CGT bill. CGT is based on the market value of the property, not the knockdown price you'd sell it to your fianc! for.

Are you positive she'd get a BTL mortgage since I assume she isn't currently a home owner?

Bluebirdman_of_Alcathays

gingercordial wrote: »

. However if she pays you nothing for it, you will have a massive capital loss (you can't do anything with this - don't go thinking you can offset it against income tax!). She will have acquired an asset for nothing and so if she ever sells it her taxable gain will be the full sales proceeds and therefore very expensive. I suppose if you are married by then she may be able to transfer you back a share to "mop up" that loss of yours carried forwards, but this gets tricky and there are, of course, anti-avoidance rules. You will need professional advice on this.

OP ignore this bad advice - CGT is based on the value of the market value if the property is given away. You could face a significant CGT bill if you give the property to your partner.


https://www.gov.uk/tax-sell-property/work-out-your-gain

gingercordial

Bluebirdman_of_Alcathays wrote: »

OP ignore this bad advice - CGT is based on the value of the market value if the property is given away. You could face a significant CGT bill if you give the property to your partner.


https://www.gov.uk/tax-sell-property/work-out-your-gain

You're right, I had been thinking they are not (yet) married so not connected parties so no market value requirement there, but yes I had forgotten the gifting/"gratuitous benefit" section.

Just shows you should never get advice on the internet. I will amend.