Tax implications of transfer of property to partner - USERNAME: Ivanmeurs
Tax Question:
My partner (we're not married) and I own and live in a residential property purchased in May 2003 for £532,500 It is owned as tenants in common (50/50). Mortgage outstanding just over £375.000. The property is currently valued at around £950.00 (we have refurbished and extended)
What would be the tax implications if my partner were to transfer his share to me. We have three small children.
Answer:
A transfer of his share to you would have three key tax implications:
- Firstly it would be a disposal for CGT purposes and his gain of around £209K would be charged to CGT. After the annual exemption and assuming he is a higher rate taxpayer the CGT would be around £55K.
- For inheritance tax purposes this would be a Potentially exempt transfer by your partner. The value gifted would only be excluded from his estate after 7 years.
- In terms of stamp duty although this is is based on chargeable consideration (and the property is presumably transferred for nil consideration?) the transfer of the mortgage would count as consideration. Therefore the transfer value for IHT purposes would be £187.5K and stamp duty would be calculated at 1%.
About the Author
The Author of this article/answer is our site Editor, Lee Hadnum. Lee is a rarity among tax advisers having both legal and chartered accountant qualifications. After qualifying a prize winner in the Institute of Chartered Accountants exams, he also went on to become a chartered tax adviser (CTA).He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.
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