Is a partial transfer of a buy-to-let property between husband and wife exempt from any CGT?

NazFinancialNazFinancial Registered, MAAT Posts: 4
Hi Everyone

I've been a member of the AAT for a good number of years but this my first post on the forum so I hope it will be received warmly by you all!

I have the following question:

An individual has a buy to let property (remortgaged) in their name and would like to transfer some of the beneficial interest, possibly half of it to his wife. Will there be any capital gains tax payable?

My understanding was that transfers between spouses is completely exempt from CGT but does this also include when the property is finally sold.

Also will he need to notify the Land registry to amend the title deeds and will his wife be required to submit tax returns now as it would be implied that she is receiving rental income which will be taxable through self-assessment.


Your thoughts would be much appreciated and apologies if I've posted in the wrong place.


Nazim






Answers

  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,035
    No CGT payable due to spousal exemption.

    When the property is finally sold to a third party the husband and wife will most likely need to pay CGT (assuming the taxable gain is more than their annual exemption for CGT purposes).

    Your clients will need to get a conveyancer/property solicitor involved in order to calculate any stamp duty due, update land registry, and deal with the mortgage lender. This could potentially trigger an early repayment charge on the BTL mortgage.

    One other point, the husband need only transfer 1% of the beneficial ownership of the property in order to achieve 50:50 taxation for income tax purposes.
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