This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Marketing

A bit of data which remembers the affiliate who forwarded a user to our site and recognises orders from those who become customers through that affiliate.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Transfer of 1% property interest to my husband
I want to transfer 1% of my property in Leeds to my husband and attain a 50:50 split on the rental income. However, the property has a mortgage of £400,000. I was under the assumption that stamp duty land tax (SDLT) would be due as we would be liable equally to the mortgage company and not a 1:99 split on the mortgage. Is this correct? If it's just 1% of mortgage transferred would we still get 50% deduction for mortgage interest on rental profits?  
 
 
Arthur Weller replies:  
Firstly, in order to give a 50:50 split for income tax rules, it is not enough to be beneficially jointly owned 99:1, but the property also has to be put into joint names (e.g. see HMRC’s Trusts manual at www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9810). Secondly, SDLT is dependent on the amount of mortgage transferred. So, if you become jointly liable to the £400,000 mortgage then there would be SDLT on £200,000 (see HMRC’s Stamp Duty Land Tax manual at www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00330a at Example 3). However, if you can get the mortgage company to agree to a 99:1 split for the mortgage, you do not have the SDLT liability, but you can still get the 50:50 split for income tax purposes. 

This question was first printed in Business Tax Insider in August 2019.

Tax Insider Lite

FREE tax strategies delivered to your inbox every month.

  • By clicking on the button below you agree to the terms & conditions and the privacy notice of the website.
  • Subscribe for FREE