Gifting property to spouse

SSG79

Morning,

I currently live in a house, which I own with my wife. We are Joint Tenants. The house has a mortgage of c.£260k, in joint names. We will be moving from this house into another house owned solely by me in due course (my wife does not own any other properties and the house we will be moving to is my only other property). When we do move, or perhaps marginally beforehand, i would like to put our current shared property into my wife's name, such that we can benefit from her lower income (she will also be on maternity leave idc). My understanding is that I can:

1) Complete a 'declaration of trust' putting all (or materially all) of the property in my wife's name. The mortgage will stay in joint names for financial reasons. I was considering either putting the property wholly in her name or doing this 99% wife, 1% self;
2) Complete Form 17 stating that my wife owns/controls either 100% or 99% of the property and hence should receive and be taxed on 100%/99% of the rental income, with the remaining income, if any, taxed under my name.
3) This will be my wife's only property so, whilst she might not live there (for her own personal reasons), would she be able to declare this her principal private residence for CGT purposes.

Any advice on the above 3 bullets would be greatly appreciated. Or indeed any advice on anything I may be overlooking. Similarly, if you are able to provide a template for a declaration of trust, that would also be great.

Thank you.
SG

Slithery

3) Not a chance. It actually needs to be your primary residence to claim PPR - just as the name suggests.

Also don't forget the extra SDLT for additional properties on your new purchase.

Upzeecreek

Also, although you can gift a mortgage free property to a spouse free of CGT, if there is a mortgage on the property your spouse will pay CGT on the" gift".
Also as previous poster stated, when you come to sell, as a married couple you can only have 1 ppr. And if you check the rules on HMRC, unless you are living in job related accommodation then you may end up paying some on your ppr. You get ppr relief for the time you lived in the property and then also letting relief. But letting relief is capped at a max of £40,000 or less if ppr is less.

Also, Hmrc, may be suspicious if you have any benefit of the rent. It needs to be paid into an account in wife's name not a joint account.
Get expert tax advice!!!

SSG79

Nice one, thank you. I just looked at the point you make re paying SDLT on the consideration. If I gift 45% of the property to spouse, then her perceived contribution would be 45% of the outstanding mortgage. If this is £260,000, then 45% of £260,000 is £117,000, which falls below the £125,000 SDLT threshold, correct? (Example below from Gov.uk)


'Example 2 - you pay SDLT even though no money changes hands
The owner of a property valued at £500,000 with an outstanding mortgage of £400,000 transfers half the property to their partner when they marry. Their partner takes on 50% of the mortgage (£200,000).

HMRC charge SDLT on the amount paid for a property or the amount of ‘consideration’ given.

By taking liability for the mortgage, the owner’s partner has given ‘consideration’ of £200,000 for their share of the property which is £1,500 SDLT (0% of £125,000 + 2% of £75,000).'

RedFraggle

Will your wife pass affordability on the mortgage on her own?

xylophone

Also don't forget the extra SDLT for additional properties on your new purchase.

There is no new purchase? As far as I understand it, the OP and wife are moving from their current jointly owned PPR to a property already owned by the OP alone?

xylophone

I currently live in a house, which I own with my wife. We are Joint Tenants. The house has a mortgage of c.£260k, in joint names. We will be moving from this house into another house owned solely by me in due course (my wife does not own any other properties and the house we will be moving to is my only other property). When we do move, or perhaps marginally beforehand, i would like to put our current shared property into my wife's name, such that we can benefit from her lower income (she will also be on maternity leave idc).

Is the mortgagee content?

Will the mortgagee give consent to let?

Sibbers123

You need professional advice.

You can't just make a declaration of trust - it has to actually be factual. I would want to see all of the rental income and expenses being paid in/out of the beneficiaries bank account at the very least. If you make a deceleration of trust which doesn't represent the true picture and split the property income on that basis - you will essentially be committing fraud.

As a married couple you will only be entitled to PPR relief on one property between both of you.

The SDLT issue will differ greatly depending on whether you transfer the property before or after you purchase the new property.

You will be paying the SDLT surcharge on the purchase of your new property.

These are just the tax implications - as above, you need to ask the bank for permission to do this as well as the banks permission to let the property out. Also, with a fairly large mortgage, it might be hard to make any sort of profit especially if you get some bad tenants.

AdrianC

So to cut that all down to the pertinent facts...

You jointly own a house, with a joint-names mortgage.
You want to transfer it all to your wife's name so you can put the entire letting income onto her tax return.

The rest is irrelevant.


And the answer is still "Will she be able to get a BtL mortgage on it in her sole name?"

SSG79

xylophone wrote: »

There is no new purchase? As far as I understand it, the OP and wife are moving from their current jointly owned PPR to a property already owned by the OP alone?

Agreed, jo new purchase, thank you.

SSG79

xylophone wrote: »

Is the mortgagee content?

Will the mortgagee give consent to let?

Hi Xylophone, I need to check with the mortgage company. I'd say it would be pretty unreasonable not to either I) give consent to let; or ii) transfer it to a BtL.

My wife's earnings aren't that significant, so not sure she'd get mortgage on her own.