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Changing ownership split of personally owned BTL prior to sale

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    Changing ownership split of personally owned BTL prior to sale

    My wife and I own a BTL property as Tenants in Common in unequal shares. In preparation to selling, I want to change this to equal shares to maximise our CGT allowance. Either to Tenants in Common but 50:50, or to Joint Tenants (not sure if it matters for this purpose).

    I don't know what this is called in order to easily get quotes and I'm not sure I explained it well because when I mentioned it as an additional item to two conveyancers who quoted for the sale, one seemed to tell me £50 and the other £1000, but neither seemed like they really understood and I don't think it's that niche.

    It should be a simple thing to do, has anyone done similar when selling a BTL for instance?

    Originally posted by MaryPoppins
    I'd still not breastfeed a nazi
    Originally posted by vetran
    Urine is quite nourishing

    #2
    Surely this falls in to aggressive tax avoidance? Changing the ownership structure for no other reason than taxation is a bit of a no no?

    https://www.taxrebateservices.co.uk/...ty-to-save-tax

    One person in a marriage or civil partnership owns a property as a sole owner. The other person in this relationship does not and therefore has not used their capital gains exemption for that tax year. Therefore the couple would be at a financial advantage if they transfer the property into joint ownership before they sell it.

    The down side is that HMRC could view this as tax avoidance if it is done too obviously close to the sale of the property. This would make it invalid and leave the couple open to investigation and possible prosecution.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

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      #3
      this any use Transfer ownership of house to spouse | SAM Conveyancing
      merely at clientco for the entertainment

      Comment


        #4
        Originally posted by northernladuk View Post
        Surely this falls in to aggressive tax avoidance? Changing the ownership structure for no other reason than taxation is a bit of a no no?

        https://www.taxrebateservices.co.uk/...ty-to-save-tax
        But changing the ownership percentages (rather than changing the structure) of a property we already co-own is something you can do as circumstances change as I understand our IFA's advice.

        Eek's link clarifies the point that actually we don't own the property in unequal shares, we just have unequal shares in the "beneficial interest". Which seems a bit like splitting hairs to me but is probably important


        Last edited by d000hg; 21 June 2022, 13:17.
        Originally posted by MaryPoppins
        I'd still not breastfeed a nazi
        Originally posted by vetran
        Urine is quite nourishing

        Comment


          #5
          They look to cover all sorts of permutations, thanks. Is this a firm you've used, or did you just Google better than me?
          Originally posted by MaryPoppins
          I'd still not breastfeed a nazi
          Originally posted by vetran
          Urine is quite nourishing

          Comment


            #6
            Originally posted by d000hg View Post

            They look to cover all sorts of permutations, thanks. Is this a firm you've used, or did you just Google better than me?
            Just googled better than you - last time I dealt with anything housing and legal was in 2001.
            merely at clientco for the entertainment

            Comment


              #7
              Originally posted by d000hg View Post
              But changing the ownership percentages (rather than changing the structure) of a property we already co-own is something you can do as circumstances change as I understand our IFA's advice.
              As circumstances change yes absolutely. Like changing the share structure of a LTD as business requires but it's well known that changing the structure for purely tax reasons is wrong and I would have thought, and showed in my link, is also the case here.

              Maybe our (my) experience with aggressive avoidance is making this in to a mountain when it's just a mole hill and everyone does it? Could it be your IFA is like one of those accountants we see on here that tell you to build an office on your property, allow you to put your Porsche through as a company car, change your share holding every month etc? Is the IFA well versed enough in taxation law? He can tell you what is good from money saving but doesn't know the fall out of aggressive avoidance? I dunno.

              Eek's link clarifies the point that actually we don't own the property in unequal shares, we just have unequal shares in the "beneficial interest". Which seems a bit like splitting hairs to me but is probably important
              I'd say it's important as it's leading you to alter the current situation to purely to gain a tax advantage which HMRC does not like whatever area of business it is. Haven't read Eek's link but if the beneficial interest has always been a woolly term and doesn't mean much then yeah probably inconsequential to change but if that covers the taxation of the income which is split unequally to be tax efficient and then you want to move away from that just to be most tax efficient with the CGT then you can't have your cake and eat it and it's very important.

              I don't know the ins and outs, just strikes me that this is going to make HMRC very unhappy so mentioned it. I'll have to leave you to investigate the details as I don't what the art of the possible is.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by northernladuk View Post

                As circumstances change yes absolutely. Like changing the share structure of a LTD as business requires but it's well known that changing the structure for purely tax reasons is wrong and I would have thought, and showed in my link, is also the case here.

                Maybe our (my) experience with aggressive avoidance is making this in to a mountain when it's just a mole hill and everyone does it? Could it be your IFA is like one of those accountants we see on here that tell you to build an office on your property, allow you to put your Porsche through as a company car, change your share holding every month etc?
                In my experience they are squeaky clean but it's a reasonable warning.

                FYI I can legitimately say our situation has changed and probably we should have done this previously (when my wife started working as initially we set this up based on my contracting income and her being unemployed). No sale has started so I think I just need to get this done ASAP. Although reading more about it, the "beneficial interest" stuff is not recorded on the title deed and in fact it doesn't seem to be recorded anywhere. It's assumed you are joint owners unless you have the paperwork to show otherwise (a deed of trust IIRC). Now I'm struggling to find if the original solicitor ever actually did this - digging through all the emails and paperwork.
                We had similar with a house we sold recently; it was bought in my name alone when we first married as my wife had bad debt history but we put something in place that said I couldn't sell it without her agreement. The sale went through in my name and at no point did they ever mention this, I was waiting for them to contact us/her about it but they never did!

                I'm a bit surprised this would be a red flag since spouses can legitimately gift things without limit but your link specifically uses the example of spouses so I clearly don't understand that as well as I perhaps should.
                Originally posted by MaryPoppins
                I'd still not breastfeed a nazi
                Originally posted by vetran
                Urine is quite nourishing

                Comment


                  #9
                  Originally posted by d000hg View Post
                  In my experience they are squeaky clean but it's a reasonable warning.

                  FYI I can legitimately say our situation has changed and probably we should have done this previously (when my wife started working as initially we set this up based on my contracting income and her being unemployed). No sale has started so I think I just need to get this done ASAP. Although reading more about it, the "beneficial interest" stuff is not recorded on the title deed and in fact it doesn't seem to be recorded anywhere. It's assumed you are joint owners unless you have the paperwork to show otherwise (a deed of trust IIRC). Now I'm struggling to find if the original solicitor ever actually did this - digging through all the emails and paperwork.
                  We had similar with a house we sold recently; it was bought in my name alone when we first married as my wife had bad debt history but we put something in place that said I couldn't sell it without her agreement. The sale went through in my name and at no point did they ever mention this, I was waiting for them to contact us/her about it but they never did!

                  I'm a bit surprised this would be a red flag since spouses can legitimately gift things without limit but your link specifically uses the example of spouses so I clearly don't understand that as well as I perhaps should.
                  I don't know about all that but if you could keep us updated I'd be interested in the outcome.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment

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