FAQs
Don’t worry if you’ve still got questions. Transferring equity can be a daunting prospect for home owners. We’re here to ease any stresses or concerns you might have. Here are some of the questions we get asked most frequently, but don’t hesitate to contact us if you’ve got more.
Does property transfer have tax implications?
The tax implications of an equity transfer depend on the nature of the transfer. There’s currently no capital gains tax charged on transfers to your spouse, civil partner or a charity. Anyone else, including children, and the property is subject to the capital gains tax (CGT). You get an annual exemption of £11,000, and anything beyond that will be charged at 18% or 28%. The tax rate depends on whether you’re a basic or higher rate taxpayer, as well as the size of the gain.
To reduce the CGT, you could transfer the property, or a share, into your spouse’s name to utilise two annual allowances and potentially reduce the CGT. For instance, if you wanted to transfer to a child. This is all something a conveyancer could help you with.
A transfer of equity like this could be treated as a potentially exempt transfer (PET) for inheritance tax (IHT) purposes. The liability only reduces gradually over seven years if the value is greater than £325,000. After seven years, it would no longer form part of your estate.
What is chargeable consideration?
The amount of property being transferred is what comes under ‘consideration’. This could include both equity and the value of the mortgage. It will depend on the size of this total whether you pay stamp duty.
But that’s not all it depends on. It’s also down to the nature of the transfer. For example, couples who are legally separating or transferring equity by court order, don’t need to pay stamp duty. Because individual situations can affect what’s paid, it’s important to discuss expected costs with a solicitor.
Is stamp duty payable when transferring a property?
It’s advisable to get legal or tax advice before attempting a transfer of equity, especially if your situation is complex. Professional guidance will always make an equity transfer run smoothly and eliminate any stress for you.
Can you transfer equity to someone under 18?
You will need to set up a trust deed Legally, someone under 18 can’t hold the property but this document allows a trustee to hold it until they turn 18 and the equity is transferred to them.
How Manak Solicitors can help you:
Do you have any further questions? How a transfer of equity works depends quite a bit on your individual circumstances. It’s advisable to get legal or tax advice, especially if your situation is complex. Professional guidance will always make an equity transfer run smoothly, and eliminate any stress for you.
Our expert team can help you with all kinds of equity transfer, including:
· When there is or isn’t a mortgage
· If the property is leasehold
· When money is changing hands or if you want to gift shares in property
· Creating a trust
Feel free to contact us for tailored advice. Our conveyancing team will be able to help. We’re always here to act in your best interest.