“My husband and I own a buy-to-let property as joint tenants. I am about to become a non-taxpayer, whereas he is a higher-rate taxpayer. We are considering transferring ownership of the property into my name only for income-tax purposes.
However, the mortgage on the property is in both our names. Can we put ownership into just my name without having to change the mortgage? The mortgage isn’t due to be repaid for another 15 years.
To switch your property into just your name you are moving from joint to sole ownership, which requires some legal work and will result in a transfer of equity.
This could mean there is a stamp duty liability if your husband's share of the property is worth more than £135,000. It's important that you check this as the new 3% stamp duty surcharge on additional properties could mean you have to pay a hefty tax bill.
You may also find it difficult to move the property to sole ownership without it affecting your mortgage. Mortgage lenders will typically require that the mortgage is in the same names as those on the title of the property. The odd lender can consider situations where there are joint borrowers but the title is only in one name. This is more commonly used in the owner-occupier market where parents are helping their child on to the ladder but could be of use in buy to let, where a sole purchaser would not meet a lender’s minimum income requirement on their own.
An alternative option would be to alter the proportionate ownership of the property to weight it in favour of you over your husband, rather than a transfer of the entire property to your name. This could mean you avoid a stamp duty bill and issues with your mortgage lender. You can do this by switching ownership to a tenancy in common and laying out that you own a greater percentage of the property than your husband. You would then be liable for a greater amount of the tax burden.
The benefit here is that changing ownership to a tenancy in common does not affect the lender’s ability to seek payment from one or both of the borrowers, as you will remain jointly and severally liable. You would need to inform HMRC so that the income would be attributed according to the ownership.
As this move is entirely focused on your tax position you will really need to seek specialist tax advice before doing anything.
Moneywise adds: When you own a property with another person, there are two legal formats for the shared ownership. You can either own the property together as joint tenants or as tenants in common.
Joint tenancy is commonly used by married couples or civil partners. It means you own the property equally. One of you can’t sell your share of the property and if one of you dies, the other automatically inherits their share of the property – you cannot leave your half to someone else in your will.
If you own a property as tenants in common, you have more control over your share of the property. It means you each own a de ned share of the property, and those shares don’t have to be equal. You can sell your share in the property and if you die your share of the property can be passed to a person of your choosing via a will or it will go to your next of kin. This type of ownership is typically used by friends or relatives who are buying a property together. It can also be used by couples who are buying a home together but not contributing equal amounts, as it means you can have it laid out in a legal document exactly what proportion of the property you own to avoid future arguments.
Tenancy in common is also a good idea if you don’t want your share of the property to automatically pass to your co-owner in the event of your death.
However, there are limits to your freedom under tenancy in common. You are still joint owners and that means if you want to sell your share, all the other owners have to agree. Also, if you take out a joint mortgage you will both be equally liable for the repayments, regardless of whether one of you owns a larger chunk of the house.
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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