Add wife to house ownership

Then let me explain my logic.

Normally, if a man owns a house outright and marries, he could change ownership to joint with his wife without any Stamp Duty implications, since he would in effect be gifting half the house to his new wife. Because a gift is a zero-consideration transfer, it is exempt from Stamp Duty, since SD is assessed on the value of the consideration, not on the value of the asset.

The trouble arises when the man doesn't own it outright, but when there is a mortgage. In this case any formal transfer of part ownership would also involve the wife becoming a party to the mortgage, and this would be deemed as consideration, because the wife is agreeing to take on joint liability for the loan, so we'd have "negative money" changing hands in the direction from wife to husband.

Now, if "positive money" *were* to change hands in the same direction as the "negative money", by the wife "paying" the husband enough to discharge (in full or in part) her liability up front, then she would no longer be taking on as much (or even any) liability, and this money would partly or fully neutralise the value of the deemed consideration for SD purposes. That's the plan, at least. I hope it wouldn't backfire and be seen as two transactions (both of the value of half the mortgage loan),

*both* of which would be subject to SD.

Market value is irrelevant, since SD is assessed not on (half) the MV of the house but on (half) the actual balance outstanding on the loan at the time the wife becomes joint mortgagor.

Reply to
Ronald Raygun
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tell that to the IR

Reply to
Willy

Unfortunately the SD is assessed on the full balance of mortgage outstanding, even though only half of it is being transferred.

Reply to
peter

Not so, according to

Reply to
Ronald Raygun

I think you'll find they know it already, and I refer you to the link I've just posted in reply to "peter".

Perhaps you are getting mixed up with how the value of the transfer by gift is assessed for CGT and IHT purposes if the transfer is between persons who are not married (to each other).

Reply to
Ronald Raygun

this is not my field, i sought advice from a solicitor and I repeated what his reply to me.

Reply to
Willy

Just checked my correspondence on this; the SD I was asked to pay was

1% of half the outstanding mortgage - so the _liability to_ SD is assessed on the full value of the mortgage is what I meant to say.
Reply to
peter

Sorry, that doesn't compute. Liability to SD is in fact, as your experience confirms, assessed on half the value, not the full value, of the outstanding mortgage debt.

Are you implying something I'm not managing to pick up?

AIUI half the outstanding mortgage balance is deemed to be the chargeable consideration on which SD is assessed.

Reply to
Ronald Raygun

OK, the _liability to pay SD_ not the amount of the SD, is based on the full outstanding mortgage. In my case outstanding mortgage was 150K, so half is well inside the SD threshold, however with the form RX1 I was asked to submit a cheque for £750, as 1% of half the outstanding mortgage. I decided to wait a couple of years till my mortgage balance is below the SD threshold, then I can do it for free.

Reply to
peter

Likely to cost you just over half the value of your house + some

Reply to
Qatar Airlines Passanger

That really is a very stupid attitude to take when someone very knowledgeable is trying to help you. John has far more knowledge about the law than you clearly have. You would be well advised to takew note of what he says.

Peter Crosland

Reply to
Peter Crosland

I was using the term loosely. If the mortgagee forecloses and sells, but there remains a shortfall, then the mortgagor is liable for this, and if there were two 'partner' mortgagors, then each can he held liable for the whole amount. A mortgagee is therefore better off with multiple mortgagors.

But any charging order would rank below a mortgage. I agree that a mortgagee might be at risk if the mortgagee was 'under notice' as to any defective status of the wife's finances. However it would be unlikely that such a transaction could be contemplated in such circumstances.

This would seem reasonable.

However, given pure common law mortgages (forgetting about any registration systems), the mortgagee owns the property and the ordinary 'owner' merely has right of redemption. It would seem that the 'owner' can convey the right of redempition (but not the obligation to pay off the mortgage) to another without any reference to the mortgagee. The Torrens registration system (as used in Australia and New Zealand) completely upends this, but I am unaware of the effects of the nglish registration system on this.

I was thinking of 'undue influence' between the partners, not with respect to the mortgagee's liabilities (this being the the usual cases where there has been so much wailing and gnashing of teeth over the years).

In this instance it seems all the husband wishes to do is clarify the ownership of the house in equity (ie who contributed what) and then align 'legal' ownership to suit. At least this is the order in which to approach the problem. Actually once the equity ownership is sorted out, it does not really matter that the wife's name is on the title. At all times to the extent that the wife has put money in the property, the husband by being the sole 'legal' owner of the house is effectively a trustee for the wife's interests.

Therefore it is probably a waste of money for the husband to 'transfer' part of the legal ownership to his wife. This would be even more so if they were contemplating selling up in the near future. They could simply register their new home in joint ownership.

Reply to
peterwn

Tell me how his knowledge of the law enables him to tell me that he understands my motives better than I do for changing the ownership of my property to tenants-in-common? I said I was doing it to protect the interests of my children in answer to Willy's question. John then presumes to tell me that a) that is not the reason I am doing it, and b) 'It is _just_ to use up the first to die's IHT threshold'. Well John and Peter for your information there _are_ other reasons than to avoid IHT for becoming tenants-in-common, and protecting the interests of the children is one of them. And of course I have the whole IHT issue in hand too, I have a solicitor who is every bit as knowledgable as either of you.

Reply to
peter

Ah, I understand what you're saying now, but I'm so surprised by it that I have difficulty believing it.

How long ago was it that you enquired about this? Could it have been when the SD threshold was still £60k? Did whoever advised you give chapter and verse, or is there a possibility they might have been mistaken?

It seems unlikely for the thresholds to apply to any figure other than the actual chargeable consideration involved. What you say suggests that if the mortgage had been for £260k you would have been asked for 3% of £130k.

Reply to
Ronald Raygun

Re-read the thread, in particular what you wrote. You explained that the reason why somebody would sever the tenancy was "something to do with the children retaining the right to a share in the house". I said that was not 'primarily' the reason and explained the reason why most other people do it which is different to yours. You then lose your temper about it.

I have never contradicted you about that.

Well lets he hope is better than average anbd that he is actually doing for you is better than your decsription..

Reply to
John Boyle

In message , peterwn writes

I take you point.

I dont think such notice would matter. A subsequent mortgagee could bring the whole thing down. Strangely, I understand some b/soc legal charges dont properly account for further advances or the rule in Claytons case which means that in certyain cases some of the primary debt can rank after the subsequent mortgage. It will be very rare, adnittedly, but has happened none the less.

I agree!

Reply to
John Boyle

The point you are missing is that John went to the trouble of trying to give you a reasoned, expert, and sensible answer to which your response was abuse. You explained your reasons and he answered accordingly so if you had a different reason and did not mention it how did you expect to get an appropriate answer? Your selfish and rude attitude may make John think twice about sharing his extensive knowledge and expertise with others on this newsgroup in future. That is why people like you get added to my kill file.

Peter Crosland

Reply to
Peter Crosland

If a property is in one name and still mortgaged (no idea if this is the case with the OP or not but for my own situation - )

- would not a easy way round this be to remortgage into joint names?

chas

Reply to
chas

this amounts to a deposition and would therefore potentially attract stamp duty

Reply to
Willy

When we applied for our first mortgage with the Century Building Society in Edinburgh (1957) the then manager Mr Cessford used to have a little box advert on the top of the front page of the local evening paper headed Cessford Quips.His reply to me when I said that I wanted the property in our joint names was "Don't do it Laddie, she'll hae the breeks aff ye if anything gangs wrong" Martin

Reply to
Derek F

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