Transfer of Equity is the process undertaken to change who has legal ownership of a property. There are a variety of reasons why it may be necessary to amend the co-ownership of a property without it being put on the market and sold.
There are some different reasons why changing the co-ownership of a property might be necessary. They include:
- Adding your spouse to the property’s deed
- Removing an ex-partner from the property’s deed
- Adjusting the percentage shares of a jointly owned property
- Reducing inheritance tax liabilities in the future
In cases where someone has been added or removed from the property’s title deeds, at least one of the original property owners will remain the same.
Equity Transfer Process
The main stages of the process of Transfer of Equity are as follows:
- Solicitor will obtain a copy of the title for the property and review it, checking for any potential restrictions on the property, such as a mortgage.
- Your solicitor will draw up a transfer deed document.
- The mortgage lender, bank, building society, and other relevant third parties will be informed. These entities must give their written consent before the transfer can happen.
- You meet with your solicitor to sign the deed. This will be witnessed to make it legally binding.
- You should notify the Land Registry. Notifying the Land Registry incurs a fee of anything from £50 to £1000, depending on the property.
Stamp Duty Land Tax Implications
When transferring the ownership of a property, you may need to pay Stamp Duty Land Tax (SDLT). The rules surrounding this will vary depending on the circumstances in which the property is transferred.
You might pay SDLT when you transfer a share in a property to a partner when you marry, enter a civil partnership or move in together. HMRC charge SDLT on the amount paid for a property or the amount of ‘chargeable consideration’ given.
There are certain instances whereby you will not be required to pay SDLT. These include where the value of the chargeable consideration is lower than the SDLT threshold or where the transfer is a gift.
To read about recent changes to SDLT, click here.
Capital Gains Tax
The laws surrounding Capital Gains Tax (CGT) are set to be updated in 2023. With these updates, couples will no longer need to settle their estate within a year of their separation and pay CGT bills. Speak to a tax specialist to learn about how this might affect you.
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please get in touch with our team of solicitors