Transfer ownership of property to wife or spouse

06/08/2018
To transfer ownership of property to your wife or spouse is common practice where to do so it is advantageous from a tax perspective (if you are gifting your property in full then click here). There are many different ways to structure sharing income from property so we have listed below a number of different scenarios. In this article we examine:

  • How to transfer ownership of property to your wife/spouse
  • Stamp duty on transfer of property between spouses*
  • Capital gains tax on transfers of property to spouse*

*This is a very informative guide with practical points covered and links to HMRC guidance notes however you should always get tax and financial advice from a tax or finance specialist.

Before progressing on it is important to understand the difference between the legal owner and beneficial interest.

  • Legal owner - the legal owner/s are registered at the Land Registry on the title deeds. You can have a maximum of 4 legal owners registered on the title and they have control over when the property is sold or transferred. Legal owners are also known as nominees or registered owners.
  • Beneficial interest is "an interest in the economic benefit of property". Your beneficial ownership in property reflects your share of any gain/loss from the property including rent and profit/loss on sale. You do not have to be a legal owner to be a beneficial owner.

When looking to share income from property, such as rental income or capital increases, in unequal shares then it is the beneficial interest that has to be shared, not the legal ownership. The legal ownership is registered on the title deeds at the Land Registry and doesn't confirm who has a beneficial interest in property (although the HMRC will assume the beneficial interest is shared equally between the legal owners unless there is a deed of trust confirming otherwise).


How to transfer ownership of property to your wife

There are many ways to transfer property to your wife/husband so they can get a share of the beneficial ownership, however they depend on your current circumstances.

    1

    Property in sole name

If you already own the property and it is in your sole name then these are a few options to consider in order to transfer the beneficial interest to your wife/husband.

Transfer of Equity


In this scenario the intention is to transfer title to wife/husband (legal title) so they are added to the deeds of the property as joint legal owners and to share the beneficial interest in unequal shares. In most cases the partner is transferred onto the legal title for zero consideration (no additional money changing hands) and at the end of the transfer you jointly own the legal and beneficial interest. Here are some other points to be considered:

  • Stamp Duty Land Tax - payable on all transfer of equities and the consideration for stamp duty land tax is calculated by adding the money changing hands onto half of the debt (mortgage) taken on. Use our online calculator to work out your stamp duty liability.
  • Deed of Trust - when sharing income from property in unequal shares you are required to complete a From 17 to HMRC and provide a deed of trust conforming the beneficial interest split between the joint owners. If you fail to do this HMRC presume that income from property is shared equally between the joint owners. Click to read more about the form 17.
  • Mortgage Lender Consent - you will need your mortgage lender's consent to allow your spouse to be transferred onto the legal title. This is normally not a problem, however if your spouse has bad credit then they may not be able to be added to the mortgage.

What is form 17?

HMRC states: "If you live together with your spouse or civil partner, we normally treat income from property held in your joint names as if it belonged to you in equal shares and tax each of you on half of the income, regardless of actual ownership. Please complete this form if you want to be taxed on your actual shares (known as `actual basis'). You will also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed."



Deed of Trust


HMRC Guidance note states:
"For the starting point in TSEM9160 not to apply there must be a separation of income from property, by way of a valid declaration or deed of trust.

For example, in an interest in possession trust (TSEM1105), the trustees own the trust property, but they are not entitled to the income arising from the property - the beneficiary is. By way of a valid deed, the settlor has specifically given the income from the property to the beneficiary. So the presumption that income follows property does not apply in this instance."

As we see from the HMRC guidance note the legal owner can use a deed of trust to share the beneficial interest in the property (the right to rental income and capital gain) to their spouse or partner. The points to consider are:

  • Potentially no stamp duty - HMRC states "Land and property transfers You may have to pay Stamp Duty Land Tax (SDLT) if the ownership of land or property is transferred to you in exchange for any payment or ‘consideration’". As the ownership of the legal title isn't transferred then there is no stamp duty land tax to pay (however you should speak to HMRC to confirm based on your own circumstances)
  • Beneficial owner has no legal owner rights - unless written into the deed of trust, the beneficial owner has no legal right to force the sale of the property so they can receive their beneficial interest from a potential capital gain via sale
  • Deed needs to be registered - a deed of trust needs to be registered with a restriction placed over the title deeds at the Land Registry
  • Mortgage lender approval - if the legal owner has a mortgage then the solicitor registering the deed should seek the mortgage lender's approval to the deed of trust.

Do you need help transferring the ownership of property to your partner?

Our panel solicitors specialise in this area and can support you execute the legal service for any of the following:

  • Drafting of deed of trust
  • Registering deed of trust at Land Registry
  • Transfer of equity

* It is important you seek tax advice for a tax specialist. If you need to speak to atax specialist please let us know and we can refer you to one of our panel specialists - Call 0333 344 3234.

Fixed Fee, No Sale No Fee with a 5 out of 5 rating

 
    2

    Property owned jointly

If you already own the property jointly then these are a few options to consider in order to transfer the beneficial interest to your wife/husband.

Deed of Trust


Much like in the example above, a deed of trust can be used to declare an unequal beneficial interest between the joint owners. Other than the points raised above, the additional point to consider is if you currently own the property as Joint Tenants or Tenants in Common. If you own the property as joint tenants then you'll need to change the ownership to tenants in common before you can register the deed of trust. You cannot own a property as joint tenants and have a deed of trust.

    3

    Not purchased property yet

If you have yet to purchase the property then you can choose to buy the property as tenants in common and draft a deed of trust to reflect unequal shares in the property.

We can help with the transfer beneficial title

Our solicitors specialise in transferring property and offer support around this complex area. To get a quote or to discuss your circumstances you can get in contact by clicking here and we will email you back or you can call us today on 0333 344 3234 (local call charges apply).

Frequently Asked Questions

What are the risks of transferring ownership of property to your partner?

The benefit to utilise the tax saving of your partner is a huge draw to transfer your beneficial interest, however if you break up in the future then you may struggle to reclaim the beneficial interest you have stated in a deed belongs to your partner. For more information read Splitting up with partner? Are you due money from the property?

How do I transfer ownership of house to family member?

Gifting property is very common, however it has tax implications and often has to be handled as a 'Concessionary Purchase'.

How much does it cost to transfer title deeds?

As we've seen above there are several routes to choose from however we give indicative costs below:

  • Freehold Transfer of Equity (no change to mortgage) - £400 INC VAT for Solicitor's Fees plus disbursements (the legal fees will be more if the property is leasehold and/or you are changing
  • Deed of Trust - £180-£360 INC VAT
  • Register Deed of Trust - £240-£360 INC VAT plus disbursements

Related News Articles

 
Basic Deed of Trust
14/07/2018
Gifting Property - 4 ways to gift your property
05/12/2018
Stamp duty on transfer of property between spouses
21/09/2018
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