Transfer of equity

Adly812

Can someone explain how Transfer of equity works.

- house current market value is £210000, bought for £155000.

- if owner wants to gift the property. And change ownership to partner or daughter.
- ...who pays capital gains tax? And if so , do you pay it on the market value (worked out by whom?) or what amount do you use to calculate capital gains?
- do you pay stamp duty? If so who pays it ?

Confused.com

G_M

Do you live in the property and has it been your main home?
* if yes, there is no Capital Gains Tax
* if no, there is CGT due on the gain: 210 - 155 = £56K
* you get an annual allowance and there may be other allowances
* if it was your main home for some of the period of your ownership, it gets more complicated

To get market value either
* pay an RICS surveyor or
* get 3 estate agents round

If you gift the property and no money changes hands, there is no SDLT.

Is there a mortgage involved?

Confused.com will not help.

Adly812

Thanks for the info. Just done a zoopla estimate, it said £18900

It's never been my main residence. It was rented out to tenants. ice never resided in it.
id like to gift it to my daughter, do it's legally hers. So trying to work out who pays the CGT and no sdlt then I assume as it will be gifted?

No mortgage.

Is it simple to do online via a tr1 form, or do we need to get a lawyer to do it?

POPPYOSCAR

This is how I worked mine out.

Second property bought 1987 sold 2017 so owned 30 years(360 mths) owned jointly.

Lived in for 9 years = 111mths

Rented out 15 years = 180mths

Bought for £70,000 sold for £600,000( gain £530,000)

PPR = 111+18 = 129mths 129/360 = 0.358
35.8% of £530,000 = £189,740

Letting Relief 180/360 = 0.50
50.0% of £530,000 = £265,000
Maximum allowed £40,000 x 2 = £80,000

PPR £189,740 + LR £80,000= £269,740
Gain of £530,000 - £269,740 = £260,260
less CGT allowance x 2 - £ 22.600

Total chargeable gain = £237,660

Assuming no other income

£237,660/2 = £118,830 gain per owner.

First £33,500 at 18% = £6030
Balance £85330 at 28% = £23892.40
Total CGT payable for each owner £29922.40

We were going to gift to daughter but decided on selling in the end.

You can claim as above for the period rented out.

You and anyone else who owns the property is liable for the CGT not your daughter.

Adly812

Wow thank you. It sounds simple when you put it in that format, yet complex Trying to work out what applies.
So would my situation be-
£189000-£155000= £34000

£34000-£11100 allowance £ 22900 X£18% = £4122

With letting relief? If applicable

POPPYOSCAR

Smb3088 wrote: »

Wow thank you. It sounds simple when you put it in that format, yet complex Trying to work out what applies.
So would my situation be-
£189000-£155000= £34000

£34000-£11100 allowance £ 22900 X£18% = £4122

With letting relief? If applicable

Where does the £189000 come from?

How many months did you let it out for?

Is it owned in one name?

Do you have any other income?

Keep_pedalling

Smb3088 wrote: »

Wow thank you. It sounds simple when you put it in that format, yet complex Trying to work out what applies.
So would my situation be-
£189000-£155000= £34000

£34000-£11100 allowance £ 22900 X£18% = £4122

With letting relief? If applicable

You can't get letting relief as you have never lived in the home.

You original post said current value is £210,000, and your allowance Is £11,300 so you taxable gain is £43,600 some of which will be taxed at 28% but how much depends on you income.

You are the one responsible for paying the tax.

Will your daughter be moving in to this property? If not selling and giveing the proceeds might be the better option for her.

I would also look at taking out a term life insurance policy to cover any IHT due on this gift if you unfortunately died within 7 years of making the gift.

G_M

zoopla is NOT a reliable source of market value. Zoopla does not look at the property. It looks at average properties in the area and makes estimates based on bedroom numbers.

You cannot use that - see my 1st post.

CGT rate may be 18% or 28% depending on your income tax rate. Or a combination of the two!

See:

https://www.gov.uk/capital-gains-tax

You pay CGT as you are the owner who has made the gain in value.

No one pays SDLT unless there is an exchange of money. If it's 100% a gift, no SDLT. If yur daughter pays you (with/without a mortgage) then she pays SDLT.

If you have no mortgage, and she is not getting a mortgage, you can DIY the gift. Complete forms and submit to Land Registry:

* TR1
* AP1
*ID1

See

https://www.gov.uk/government/publications/registered-titles-whole-transfer-tr1

Adly812

Thanks G_M.

Yes as above I put £210000 but zoopla said £189k . I totally agree it's not accurate, but just worked it out for for a guesstimate figure. I'll of course get accurate valuations when it comes time.

I rented it out for 3 years. And it's just in my name.

I'll need to check what rate I pay 18/28% depending on my income.

Thank you. Things are a lot clearer now.