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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My partner is the sole owner of the property we live in. It

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My partner is the sole owner of the property we live in. It is worth £550k with a mortgage of £225k. He would like to transfer it into our joint names. We are not married.
I have enough cash to repay the mortgage in full, though we are not decided about repaying it, we may use the cash for another project.
Can we make this transfer without attracting SDLT? (or any other tax liability?)
Many thanks
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Assuming that there is no cash payment involved, the only transfer of value for stamp duty purposes is £112,500, 50% of the mortgage. As that is below the £125,000 threhold at which stamp duty liability starts there will be no liability. As your partner is gifting you half his home, it is a part disposal for Capital Gains Tax purposes but the paper gain will be exempt from CGT assuming the property has always been his main home. However, the gift is also a potentially exempt transfer for Inheritance Tax purposes which will remain in your partner's estate for seven years after it is made. Take a look here for information on IHT. The potential IHT liability starts to taper away after three years as you will see here. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thank you Tony.
For IHT - is he gifting me half of the equity in the property? (Seems very strange to me that the SDLT is levied on mortgage)
Expert:  TonyTax replied 1 year ago.
A mortgage is treated as cash for SDLT purposes. The gift for IHT purposes is half the equity less half the mortgage assuming you will be joint equal owners.
Customer: replied 1 year ago.
Sorry Tony how are you defining equity? thks
Expert:  TonyTax replied 1 year ago.
Equity is the difference between value and cost but as you will be responsible for half the mortgage, the gift value takes account of that.
Customer: replied 1 year ago.
So he is not gifting me £112,500 ie half of the equity in the house (550-225=225/2=112.5)
Expert:  TonyTax replied 1 year ago.
The gift is £162,500 (£550,000 - £225,000 / 2).
Customer: replied 1 year ago.
Maths never my strong point!
Thank you Tony you have been very helpful
Expert:  TonyTax replied 1 year ago.
Thanks. Would you mind rating my answer before you leave the site please.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15883
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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