Selling my house to my wife for the money I lend her

slizovskiy

I own a house (no mortgage)  and I  may  be in need to buy another house in the future.   I want to restore my virginity to become a "first-time-buyer" again and for that reason I want to sell the house we both live in to my wife, who will be a first-time-buyer.  I want to give an interest-free loan to my wife to buy a house from me.  Is that lawful? 
Of course, do not have these money in cash, but, I expect, this is not need since the money are, finally, not changing hands.   I do not want to make this as gift, because it will then lead to a huge income tax if we will decide to sell the house.   If I understand it correctly, the scheme I advocate will incur neither an income tax (since I was living in the house since I bought it), nor a Stamp Duty (the value is below 250 000).  
EDIT:  I quote the right answer here for convenience of future readers:
The loophole is closed and selling a house to a partner will not allow me to evade 3% extra Stamp Duty Land Tax , while the "first-time buyer" title can never be restored  in any way.    Still, if I had adult children/parents or other relatives,  the idea could have been worthy, I guess.  The loophole is closed only for the partner. 

p00hsticks

You own a house. The fact that you sell it, to your wife or anyone else, will not make you a first time buyer.

Slithery

slizovskiy said:

I want to restore my virginity to become a "first-time-buyer" again.

Just like virginity it doesn't work that way. Once it's gone you can't get it back again. Your wife is no longer a FtB anyway, as a married couple all assets are shared so she already owns a property with you no matter whose name is on the deeds or who paid for it. Your whole idea is a complete non-starter and wouldn't achieve the outcome that you're hoping it will.

lr1277

Why do you think gifting the house to your wife will lead to an income tax bill down the road?

As far as I know, transfers between spouses are free of all taxes.

There would olnly be income tax if say your wife started earning money from the house. Does she plan on renting it out once she owns it?

I don't think there will be any CGT on sale as it is the primary residence for both you and your wife.

getmore4less

Won't stop additional property SDLT.

SDLT_Geek

getmore4less said:

Won't stop additional property SDLT.

That is right.  If OP buys another property when OP's spouse still owns the first one, the extra 3% SDLT will apply (assuming a purchase in England).

eddddy

slizovskiy said:

I want to restore my virginity to become a "first-time-buyer" again and for that reason I want to sell the house we both live in to my wife, who will be a first-time-buyer.  

Just to be sure - I guess you should clarify for what purpose you're hoping to be "a first time buyer". There may be different definitions for different purposes.

If it's for SDLT purposes, as others have explained, your plan won't work.

But, for example, if it's to get a mortgage product described as a "First Time Buyer Mortgage", the mortgage lenders will set their own eligibility criteria. For example, Nationwide say:

we see first time buyers as customers who have not had a mortgage in the last three years

Link: https://nationwide.co.uk/products/mortgages/first-time-buyers

Grumpy_chap

What will be the purpose of the second house?  Probably can't avoid CGT when selling, as second house will not be primary residence

saajan_12

slizovskiy said:

I own a house (no mortgage)  and I  may  be in need to buy another house in the future.   I want to restore my virginity to become a "first-time-buyer" again - FTB in what sense? For SDLT, or some of the govt schemes, you can't undo the previous house ownerships. 
and for that reason I want to sell the house we both live in to my wife, who will be a first-time-buyer. - why? Then your wife loses actual FTB status for some purposes. For additional SDLT, you're considered a unit so you'd still be liable for the 3% if you buy a new house when one of you already owns one. 
 I want to give an interest-free loan to my wife to buy a house from me.  Is that lawful?  - yes.. but may not have much benefit. 
Of course, do not have these money in cash, but, I expect, this is not need since the money are, finally, not changing hands.   I do not want to make this as gift, because it will then lead to a huge income tax if we will decide to sell the house.   - income tax on what? do you mean capital gains? or is there some business involved?
If I understand it correctly, the scheme I advocate will incur neither an income tax (since I was living in the house since I bought it), nor a Stamp Duty (the value is below 250 000).  - what income tax do you mean? gifting the house, or leaving it in your name will likely have the same effects on capital gains tax, but you need to clarify what you mean. No stamp duty for the transfer to wife, but you will have 3% SDLT on your purchase as you + wife are treated as a unit. 

Pls clarify exactly what purpose you need the FTB status - as it may not apply if you've owned in the past, regardless of whether you own a property now.
Also what income tax do you mean? 
SDLT should have no change, wife owns = you own. 

slizovskiy

Thank you for so many replies!  I see that there is indeed some caveat with selling to my wife. About FTB:  If I buy a second house, I will need to pay 3% extra  Stamp Duty, but I can claim it back if I sell my first house in 3 year period.   So, you argue, that I cannot sell it to my wife to get these 3% back, right?

slizovskiy

Grumpy_chap said:

What will be the purpose of the second house?  Probably can't avoid CGT when selling, as second house will not be primary residence

The second house will be the primary residence, while the current one will be let.  To clarify,  I understand that I cannot be a first-time buyer again,  but can I save 3% on second house if my first one goes to my wife?