Joint tenants to tenants in common 99:1 - steps

timdee

My wife and I own a rental property as joint tenants. We are looking to change this to tenants in common with a 99:1 distribution in favour of my wife.


As I understand it, we need to fill in and send across the SEV form to the Land Registry to update ownership. This looks fairly straightforward and we can do ourselves.


For HMRC to accept unequal distribution of benefits, if I'm not wrong we will also need to create a deed of trust which shows the unequal ownership and submit this to HMRC along with a form 17.


I hope these are all the steps needed.


My primary question is regarding the deed of trust. Can we DIY this or do we need a conveyancing solicitor to draw it up?


I would be grateful for any advice on this matter.


Tim

anselld

You do need the deed in order to specify the new ownership of 99:1 since registering the SEV is only to change from JT to TIC with a 50:50 split.

You can DIY if you know what you are doing.

And as you state the final step Form 17.

Be careful if you have an outstanding mortgage though because the equity transfer of 49% implies a "consideration" of 49% of the outstanding mortgage which may trigger SDLT and or SDLT2.

Andysandy

Registering the severance (SEV) and Form 17 aren't complicated and potentially something you can do yourself if comfortable.

You could DIY the deed of trust using templates online BUT it's important to get it right and imho you may be better off getting it done by a fixed-fee solicitor, it should not cost too much.

To expand on what ansell said, when changing from 50:50 to 99:1 on a mortgaged property, SDLT is payable on the value of the mortgage liability transferred if the value of the transfer exceeds £40,000.

So for a mortgaged property with an o/s mortgage of 120k, you would be deemed to be transferring 49% i.e. £58,800 hence triggering an SDLT liability.

These are general notes on the scenario and might not necessarily be applicable based on the specifics. I would recommend taking professional advice.

timdee

Thanks both for your responses! I had no idea stamp duty could be due for such a move.

The house has a mortgage of 158k, so would that mean if we moved to 75:25, that would mean a mortgage liability transfer of 39,500 and hence no sdlt?

If I did seek professional advice about sdlt liability would that be from a solicitor or an accountant?

Thanks again!

chanz4

what are you trying to gain by doing this move?

Andysandy

Tax efficiency I would presume. The partner must be on a nil band or lower tax band than the OP.

chanz4 wrote: »

what are you trying to gain by doing this move?

timdee

Yes, that's correct, as per what Andysandy said in the post above.

chanz4 wrote: »

what are you trying to gain by doing this move?

Andysandy wrote: »

Tax efficiency I would presume. The partner must be on a nil band or lower tax band than the OP.

timdee

Just a final update. I enquired with a local accountant who said it's a conveyancing solicitor who can give me advice on whether SDLT is due or not.

As suggested, I engaged the services of a solicitor for a very reasonable fee. He has drawn up a deed of trust and confirmed that a 75:25 split will not trigger any SDLT.

Thanks again for the advice.