What is Transfer of Equity?
Transfer of equity describes the legal process used to add or remove someone from the title deeds of property (adding or removing them as an owner). There’s no sale of the property and at least one of the original owners will stay the same. You might transfer equity for several reasons, including:
- The breakdown of a relationship. If you’re separating from your partner, you’ll need to divide up your assets – and the home will often be the most significant one.
- A new relationship. You might have bought the house yourself and later entered a relationship. A transfer of equity could add your new partner to the deeds.
- Buying out the equity of a joint owner. More and more people are buying properties with friends or family. The time may come to buy them out.
- For tax purposes. Home owners sometimes transfer equity to their children or other family members to be more tax efficient. It can be seen as a gift, but always seek advice about your tax liabilities.
When all parties agree on the outcome, equity transfers can be straightforward – partly because there are no searches required as there would be with a sale. But it’s important to look at each transaction individually, as it can become more complicated when mortgages or disagreements are involved.