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  • Tax

    Using wife’s CGT allowance

    Hi

    I own a buy to let property that I am selling, it's in my name only and has a mortgage against it in my name only. The CGT gain will be large and I will be paying 28% CGT as I am a higher rate tax payer.

    If I complete a transfer of equity now and make my wife 50% owner and add her to the mortgage will I be able to use her CGT allowance and pay some of the tax at 18% (she is a basic rate tax payer)?

    I am planning on putting the property on the market in the next month or so so the completion on the sale is likely to be 3 months away minimum.

    Are HMRC ok with this or do they see it as tax avoidance?

    Thanks

    PG

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    HMRC are okay with this however -

    Stamp duty will be payable in respect of the mortgage element of the amount transferred to your wife

    The buyer’s solicitor is likely to want to raise the transfer with the buyer’s mortgage lender to ensure it doesn’t breach any six months before resale rule, not likely to be a problem but may delay sale.

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    I have been thinking about the exact same thing for one of my first ever properties.  Do you know if the stamp duty related to the mortgage amount would have the extra 3% applied if the spouse has property already?

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    Thanks for the reply. The consideration for transfer is less than £100k so I think I will pay no stamp duty. If my buyer is buying with a mortgage (which is likely) is the lender they use really going to be concerned that my wife has ownership for <6 months, even though i have owned the property for 10 years?

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    The lender is unlikely to have an issue with it but the solicitors for the buyer may decide that they need to refer it to the lender.

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    I don’t think the extra 3% is applied on the basis you already own the property.  If you don’t have a mortgage on the property there is no stamp duty and is easily completed direct with the land registry - they have some videos showing how to complete the forms.

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