Transfer of Equity

This is where proprietors transfer their equity share to another, such as; you may want to add a partner to the Title, so you own the property together, or you may want to remove your partner from the Title after separation/divorce. 

Equity and value of a property are not the same thing 

It is important to note that the property's equity is different from its value. If a property is valued at £500,000 but is subject to an outstanding mortgage balance of £150,000, then the equity of the property is £350,000.  

Considering the transaction is a transfer of property, a Land Tax return will need to be made to HM Revenue & Customs, even when no monies change hand, but the equity transferred is over £40,000.00. You may therefore be liable to pay Stamp Duty Land Tax on the transfer.

Suppose the property being transferred is subject to an existing mortgage charge. In that case, lender consent is required to either agree for one party to be removed from/added to the charge. The leaving proprietor should be indemnified for any further liability under the mortgage, but a joining proprietor will need to be aware that they will equally be fully liable for the mortgage, regardless of the time they held joint ownership of the property.

Manage Tax Liability

Transferring property can be a means to manage your tax liability, such as transferring property by way of a gift to your children, or it can be a way to minimize tax within estate planning. However, prior to any transfer, it is important that you seek independent legal advice.  

If you wish to have any further information on the Transfer of Equity on a property, please contact our Residential Conveyancing team, who will be able to assist you further.

 

Expert
Heidi Vanlangenaeker
Solicitor
Joe (Joseph) Jordan
Trainee Solicitor