Changing ownership of rental properties.

Retired_Mortgage_Adviser

[STRIKE]If you get property/equity as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it.

But if the transfer involves taking over some or all of an existing mortgage, SDLT may be due depending on the value of the mortgage.

From what the OP said, both properties appear to be mortgage free.[/STRIKE]

Tom99 wrote: »

I would have thought you will also be liable for stamp duty maybe even the +3%.
You are not gifting the property you are selling it and getting in return another property which has a value.
If it were that easy to avoid stamp duty all sorts of avoidance schemes would crop up.

Tom99

Retired_Mortgage_Adviser wrote: »

If you get property/equity as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it.

But if the transfer involves taking over some or all of an existing mortgage, SDLT may be due depending on the value of the mortgage.

From what the OP said, both properties appear to be mortgage free.

But it's not a gift at nil consideration, both parties are getting something in return which has a value.

37eeyore

BoGoF wrote: »

Nobody is going to tell what CGT you have to pay, that will be up to you to Self Assess that in your Tax Return. By which time I imagine the time to void it will have passed.

You make a good point! I had forgotten about my dreaded self assessment tax return. On hold to HMRC again,:(

Tom99

Re stamp duty:

'In most property transactions, you pay money in exchange for the property or land, or for an interest in land, but there are other ways of making payment. If you give something of value in exchange for land or property, it counts towards the chargeable consideration.'

https://www.gov.uk/guidance/stamp-duty-land-tax-the-amount-used-to-calculate-whats-payable

Retired_Mortgage_Adviser

Indeed! It's not a gift, more an exchange. I did not think of it that way. Thanks for highlighting this.

Tom99 wrote: »

But it's not a gift at nil consideration, both parties are getting something in return which has a value.

BoGoF

A lot of people who DIY these things often end up with bills as they did not seek professional advice.....I fear you have fallen into that trap.

37eeyore

After three quarters of an hour on the phone to the tax office (mostly on hold), I'm none the wiser. I got passed around to a few different people who all thought it didn't seem right to have to pay CGT but weren't sure how I deal with it on my tax return. The last one told me to look at form HS259 but I think that was just to get rid of me!

37eeyore

BoGoF wrote: »

A lot of people who DIY these things often end up with bills as they did not seek professional advice.....I fear you have fallen into that trap.

Not yet I haven't. Luckily I thought to ask questions first even though I didn't know what the question was at the start.:)

BoGoF

37eeyore wrote: »

After three quarters of an hour on the phone to the tax office (mostly on hold), I'm none the wiser. I got passed around to a few different people who all thought it didn't seem right to have to pay CGT but weren't sure how I deal with it on my tax return. The last one told me to look at form HS259 but I think that was just to get rid of me!

Which is why I keep saying get professional advice. The front line staff are not trained to deal with these issues. Whether you they or anyone thinks it's 'not right' is irrelevant. You have disposed of an asset for Capital Gains Tax puposes.

Not sure why you needed to phone them back anyway.....did you read the link to the .GOV site? It's pretty clear.

37eeyore

Yes I did read the link. Maybe you wouldn't think it was so clear cut if you were facing a £40,000 tax bill for ending up with the same value of assets as you started with. I can't afford this and I was looking for options. I thought I would check on here first before I spend money on professional advice. After all, the site is all about saving money.