Transferring home to spouse then purchasing a new property query.

nero33

Hi.

I have a query relating to a close relative and their current home (in Wales). There's no mortgage on it and it's in the husband's name.

He's planning on transferring this property to his wife who doesn't own or have any property in her name.

He'd like to purchase another home (also in Wales) with his son in which all 3 will live in as their main family home.

His question is will he avoid the Welsh Land Transaction Tax (LTT) if he goes through it this way or not?

He's done some research but couldn't understand the search results and nor could I when I looked.

Thanks for any advice you can offer.

bobster2

This attempt at tax avoidance will not work. Married couples are treated as a single unit.

Higher rates apply when buying a second home and you cannot get a refund if your spouse still owns your previous main home.

https://www.gov.wales/higher-rates-land-transaction-tax-overview

Keep_pedalling

it might however reduce income tax if his wife is a standard rate or non tax payer if the plan is to rent out the existing property. As we are talking marrital assets she should not really be left off either property.

silvercar

The son could buy it in his name alone, using a 'sole proprietor, joint borrower mortgage' if the son needed a mortgage and his own income wasn't sufficient. The father could gift the son a deposit. Obviously, the wider implications of having the property solely in the name of the son should be considered.

poseidon1

Can't see the confusion here, the Welsh government's own website makes it clear that married couples are treated as a single unit for the purposes of LTT, so completely pointless transferring current residence to wife if the intention is to try and avoid 2nd property LTT.

Similarly buying 2nd property with the son does not avoid the LTT husband is liable to.

Just read the guidance below - nothing complicated in the terminology in my view -

https://www.gov.wales/higher-rates-land-transaction-tax-overview#:~:text=If%20you're%20married%20or,the%20transaction%20as%20a%20whole.

Of course if they sell the current home within 3 years, a refund of excess LTT paid is recoverable, again explained in the guidance.

Grumpy_chap

Is the son contributing financially to the purchase of the new house?

If not, why is the son being added to the deeds? This will impact future FTB status (if applicable) and may result in future second property charges if the son buys his own place, flying from the family nest.

As a family home and marital asset, I assume both spouses will be named on the deeds.