Gifting Half of a Property to a Spouse: Tax Questions

[Katherina198819]

My husband and I bought a house back in 2021. At the time, he was the only one who could apply for a mortgage, as I had been furloughed from work and was about to go on maternity leave.

We did a lot of work on the house and were able to pay off the mortgage (thanks to the money from both of our families). The house is now worth over £500.000, and we want to make sure that if anything happens to either of us, our two young children (both under 4) will be taken care of; even if the surviving parent eventually remarries.

We spoke to a lawyer about writing a will, including what would happen if one of us dies, or if we both die. We belive that the easiest way to ensure our wishes are respected is to sign over 50% of the house to me. That way, if I die, my 50% can be secured for the children; and vice versa.

Our main question is: If my husband signs over 50% of the house to me as a gift, will I have to pay tax on it?

The lawyer we spoke to referred us to a tax specialist, but our appointment isn’t for several months. Since we are not originally from the UK and aren’t familiar with the tax or legal implications here, we’re hoping to find out whether this is even a possibility in the meantime.

No
Neither will he. Gifts between spouses are tax exempt

Gifts between spouses are exempt but it may not even be a gift anyway.

In the UK, there is something called a "beneficial interest". This will come about where, although you aren't named on the title deed, the two of you have agreed that the house should be shared. Like in this case, the only reason you weren't named on the title deed was because of the mortgage but it was your joint intention that the house was owned equally.

It can also come about if you have helped contribute to the home

"We did a lot of work on the house"

"...money from both of our families"

But it is always easier if your name is on the title deed and your husband gifts you half of the legal ownership of the house

No and to be honest I would get a better lawyer because tax exemptions as applicable between spouses is fairly basic stuff that any lawyer writing wills should know.

You first of all need to own the house as tenants in common (TIC) in equal measures. This has no tax implications and can be done simply. www.gov.uk/registering-land-or-property-with-land-registry/transfer-ownership-of-your-property
If you currently own it as joint tenants then what you write in a will is irrelevant as the house would automatically belong to a surviving spouse.
Once it is registered as TIC you can write your wills to state who your share of the house will go to once you die - this is usually done via a trust whereby the surviving owner is able to remain in the property until they either remarry or die. A solicitor can do this quite easily. I also advise that both of you complete Power of Attorney applications for finance so that should the surviving spouse lose capacity the POA can act on their behalf for financial affairs. This can be completed yourselves for around £80, whereas a solicitor is likely to charge a few £££s.
www.gov.uk/government/publications/make-a-lasting-power-of-attorney