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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Tony. I am splitting up with my partner who is also my business partner. In 2003 we s

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Hi Tony. I am splitting up with my partner
who is also my business partner. In 2003 we started buying terraced houses to renovate and rent out. We own the houses 50/50. Some have mortgages, some we own outright. We have not formed a company, we submit the income on our individual tax returns.
We now need to split up the houses
so that we can own them outright individually. Presumably we have to
obtain one or more valuations on them
and then agree who has what. Can we achieve this without incurring a tax bill and what do we have to do or not do as the case may be. My partner has asked me to sign and agreement to the effect that if we cant agree either on values or who has which houses, that either of us can give the other Notice to Sell, giving the other first opportunity to buy and then taking the house to market. What effect would this scenario have on tax liability? We have not formed a company we just submit the rental revenue as personal income on our tax returns. ma
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Let me take a look at this and I'll get back to you.
Expert:  TonyTax replied 1 year ago.
You can make a joint claim under Section 225 TCGA 1992 so that the CGT is deferred until you each sell a property that you then own outright. There may be CGT to pay if a balancing payment has to be made to equalise the exchange. Take a look here for more information: https://www.taxinsider.co.uk/381-Splitting_Land_or_Property.html I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 1 year ago.
Hi, I'm just checking in to find out if you need further advice or clarification.
Customer: replied 1 year ago.
Hi Tony
Thank you for your reply, it looks promising news! Can you confirm whether
our transaction will attract a stamp duty payment? I have been unable to find
any reference to our kind of swap. There are 15 properties involved, so we will
end up having more than 6 each and there seems to be some reference to
6 of more counting as a commercial transaction. Also I do not fully understand
whether there is a way of breaking down the transactions into smaller chunks.
Presumably we will be affected by the changes on 5 April, so does this mean
that even if we wouldn't attract a liability now, we will still attract the 3% levy
after 5 April?
Can you help with this?
many thanks, SallyA
Expert:  TonyTax replied 1 year ago.
I'll have to get back to you on that.
Expert:  TonyTax replied 1 year ago.
Take a look under the heading "If you transfer or divide up jointly-owned property or land: unmarried couples and other joint owners" here:
https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property
That explains the stamp duty rules.
As far as Stamp duty is concerned, as you would be claiming relief from CGT as previously described there is relief available from stamp duty as a spin off from the CGT relief but it is complicated and I'm not an expert on stamp duty. A property lawyer would be able to advise you on that, especially one who has dealt with your type of situation. I would be surprised if the 3% SDLT hike was charged in this situation but its so new there isn't any commentary on property swaps and the 3% increase that I can find.
There are some notes here:
https://www.gov.uk/guidance/stamp-duty-land-tax-relief-for-land-or-property-transactions
Customer: replied 1 year ago.
Yes, I had also made my way to that page but the information
seems open to interpretation, so I agree that we are probably
going to need someone who has first hand experience of our
scenario. If you come across any other relevant info, I would
be very grateful to hear from you. Many thanks, and
kindest regards, Sally ps maybe you would be interested to
hear from me when we eventually get sorted!
Expert:  TonyTax replied 1 year ago.
SDLT is a messy tax. I would like to know the result. Thanks.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15846
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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