If my husband sells his house to me, will we need to pay stamp duty or CGT?

[AhhhhThatsBass]

My husband has owned a property solely in his name which he has owned for about 15 years and is rented out. This is in addition to our family home which is jointly owned (in both our names)
The rental property is worth about £1.5m and is mortgaged on a BTL but the income is significant enough that even under the new regime relating to tax treatment of interest on mortgage payments, it still generates a healthyish profit. (albeit crap yield). As a top rate tax payer, my husband pays 45% tax on the profit on the income. (after paying the mortgage)

I am considering giving up my job to be a SAHM so will have no personal income.
In theory it makes sense to transfer the rental property into my name for tax purposes ie I will have my full tax free allowance and pay only 20% on the rest of the income on the rental property.

My question is this: what is the implication of transferring the rental property into my name? Will I have to pay stamp duty? Or would he have to pay CGT?

Many thanks in advance for any advice.

No CGT to pay as it's an inter-spouse transfer. You will inherit your husband's base cost. I think you'll still pay stamp duty though. If you were getting divorced and were receiving the property by court order there is an exemption from stamp duty, so presumably otherwise you'll pay. IIRC it will be based on the equity in the property, so may make it very expensive.

Plus as you jointly own the main home you'll have the 3% stamp duty surcharge. And you may struggle to get a mortgage on it in your own name.

We did something similar last year for slightly different reasons. We had a rental property that was jointly owned and dh gave me his interest via a deed of trust. I think stamp duty is based on the purchase price and since he gave it to me for free there was none to pay. I think it will still be registered in joint names, but it's beneficially mine and I declare all the rental income on my tax return. We checked this out with our tax adviser and the deed was drawn up by a solicitor so I'm pretty sure it is all above board. It cost a few hundred pounds for the deed but that was all.

A deed of trust is different than transferring the ownership with the land registry.
It should achieve the objective you want though OP.

Thanks for the advice, that's very helpful. I did think we couldn't avoid the stamp duty issue.
A deed of trusthowever, I hadn't thought about that. Would I need to see a solicitor or would it be a tax accountant or would it be a financial adviser?

Thanks again.

Apologies, grammar all over the place today - typing quickly but no excuse.

Each spouse is taxed as separate individuals. Disposal of asset between spouses give rise to no gain no loss as the transferee is assumed to take over the asset at its Cost.

When the asset is eventually disposed to someone else other than spouse than the gain is calculated based on the original cost of purchase (not transfer).
You pay SDLT if the consideration given in exchange for the share transfer is more than the current SDLT threshold for the property type.

Example 1 - you don’t pay SDLT

A house has a value of £180,000. The owner of the property has equity of £90,000 and an outstanding mortgage of £90,000. The owner transfers a half share of the property to their partner.

Their partner:
•pays cash for half of the equity - £45,000
•takes responsibility for 50% of the outstanding mortgage - £45,000

So the consideration for SDLT is £90,000, made up of the:
•cash payment
•50% share of the outstanding mortgage

£90,000 is below the current SDLT threshold so there’s no tax to pay. You must still tell HM Revenue and Customs (HMRC) about the transaction on an SDLT return.

Example 2 - you pay SDLT even though no money changes hands

The owner of a property valued at £500,000 with an outstanding mortgage of £400,000 transfers half the property to their partner when they marry. Their partner takes on 50% of the mortgage (£200,000).

HMRC charge SDLT on the amount paid for a property or the amount of ‘consideration’ given.

By taking liability for the mortgage, the owner’s partner has given ‘consideration’ of £200,000 for their share of the property which is £1,500 SDLT (0% of £125,000 + 2% of £75,000).

They must pay SDLT on that amount and tell HMRC about the transfer by filling in an SDLT return.

The equity isn’t included in the calculation as you only pay SDLT on the consideration given.

If the transfer is a gift

If the transfer is a gift and there’s no consideration, SDLT doesn’t normally apply.

Check the mortgage provider's conditions on what can be done - BTL loans are fairly limiting, e.g. you can't even stay overnight in your own BTL.