Updating post from Reddit.
So we did a remortgage where I gifted the wife 99% of the property, the remortgage happened today but I wanted to understand whether it is from today, that any income become 99% for her and 1% for me?
Is it when the deed gets updated or does that get updated in retrospect of the remortgage date, making it the remortgage date?
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Hahahahahahaha
Well it comes into my bank account so I’m not too sure 😂😂
Man HMRC are going to LOVE this at the end of the year lol
You need to go on the HMRC website and fill in the form notifying them.
I know, but the form must be accompanied by proof such as a title, which I haven’t received yet. Are they looking for a copy of the title from the land register, or a solicitor drafted deed of trust? Until I have either of these, I can’t send the form - and once sent, is it from that date it’s signed that it would be valid?
I think you state the date of transfer of Form 17. As you say you need to accompany a document showing it. In my case, I just attached the from I signed and gave to the solicitor registering the purchase that asked what type of ownership and if TiC, what the split was.
Thanks. Sounds like the disposition document that I have. How long did hmrc take to get back to you?
I got a response in about 4 weeks, only to say it had been accepted, nothing more.
If you gifted the property to your wife rather than using a deed of assignment, I would have thought a solicitor would have been involved for the remortgage and effective sale of the property? Once they've logged the sale/transfer of equity with land registry, the contract date will be the logged date. This can take several months to complete as it is not a priority. For tax purposes, it is the contract date that applies. Hopefully, you didn't have to pay stamp duty for the sale?
Hey thank you for your reply! Yes it was done through a solicitor who did the remortgage as well as the title transfer. This is in Scotland, so the solicitor sent me a “disposition” soft copy form which had the land registry number of my property as well as the transfer of 99% from me to my wife; this had to be signed by them, but she sent a draft for my approval - would a copy of the disposition (signed by the solicitor), along with form 17 suffice for hmrc? And the contract date would be the remortgage date - correct?
I did not have to pay stamp duty as a transfer of equity is considered to default at 50% split between husband and wife; so that’s 50% of the consideration which is the outstanding mortgage. The outstanding mortgage is 142k, so half of that does not trigger stamp duty - she’s also a first time buyer so no stamp duty or additional dwelling thankfully.
Unfortunately, I haven't had any experience with property transactions in Scotland. Usually, the transfer date and remortgage date would be the same, and that date would be registered with land registry (eventually). This date would be your date for taxation with hmrc. Double check this with your acting solicitor.
From my previous mortgage, the land register did have the date that i got my property mortgaged so that should be correct. But does this mean I have to wait until the land register is updated to be able to submit my form 17? What is the equivalent to the land register data in England that would be provided along with form 17?
Is this just for your tax? If so, you just need to report income at the new split from the transfer date. The solicitor will advise the land registry of the transfer of equity, and eventually, it will be updated with the actual transfer date, not the date they finally process it.
Yes for income tax. Hmrc will assume it’s a 50/50 split until you send a form 17, so form 17 will only be valid on the date it’s signed, but can’t be sent more than 60 days after it’s been signed as it’ll be invalid. So we’ve signed one as of the remortgage date yesterday and hope to receive the land registry details before 60 days, so that I don’t have to pay tax
Why didn't you just do a deed of assignment?
I think you are misunderstanding. The form 17 doesn't create the split. Assignment does that. However according to tax law in the case of spouses it remains at 50% until the form 17 is submitted to HMRC. These are two separate things.
If they had just used the deed of assignment, the transfer of ownership wouldn't have been needed, and there wouldn't be any doubt over the ratio of ownership. Is that correct?
A Deed of Assignment IS usually a transfer of partial ownership. There is legal ownership and beneficial ownership. Legal ownership is basically who is named at Land Registry. Beneficial owners are the actual owners. The one might have nothing to do with the other - you can be a legal owner and yet own nothing at all (0%). Likewise you can own 100% of the beneficial interest and not be a legal owner. What HMRC needs to know is the beneficial ownership.
To say it another way - you can modify the beneficial ownership without ever notifying Land registry at all.
No you don't have to wait for land registry (and in fact it is not always necessary for land registry even to know about trust deeds). You send the trust deed along with the form 17 to HMRC.
I’d suggest re-checking some of this, though you don’t necessarily have a financial problem.
If you fully owned the BTL and transferred 99% to her, the consideration of no cash changes hands is just 99% of the mortgage. If that is over the SDLT threshold, she have to pay it.
My understanding is that the 50:50 refers to assumed ownership of joint assets unless stated otherwise on Form 17.
If you own your main home and are married, regardless of ownership, your wife cannot be considered a FTB. Not could she have purchased a property herself and avoided the additional SDLT.
In this case the Additional SDLT is avoided as it isn’t applicable on transfers between spouses.
I’m recalling this from my transfer a few years back so things might be different now.
I fully owned the BTL and transferred 99% to her, 99% of the mortgage is like 142k so still under, no stamp duty. We’re in a weird situation where we actually rent, so neither of us have another property so no additional dwelling