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Wed 8th September, 2010
News
Transfer of Equity |
21st December 2006 |
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A Transfer of Equity is where an owner of a property agrees to transfer all or part of their interest to one or more parties.
Prior to instructing a Solicitor / Conveyancer the first objective for the parties is obtaining the mortgage lender’s consent to the transfer and the person buying the shares must satisfy the mortgage lender’s conditions and comply with the usual formalities when applying for a mortgage.
The lender will require an up to date valuation of the property to be carried out as it will be necessary to calculate the amount, if anything, that the outgoing owner is due to receive from their share in the property.
Stamp Duty Land Tax (SDLT)
This is a very complex area, however the basic conditions are that Stamp Duty Land Tax will be payable by the Transferee on both the percentage of equity that they have purchased together with their percentage of any outstanding mortgage.
On the otherhand if the there is a transfer for no consideration (e.g. money) or a grant of a lease for seven or more years for no consideration the transaction will be deemed exempt in respect of SDLT purposes.
There is also an exemption from SDLT for transactions carried out in connection with divorce such as the transfer of the marital home from joint ownership into the sole ownership of one of the ex-spouses. There is a similar exemption for transactions carried out in connection with the dissolution of a civil partnership.
Types of Transfer of Equity
Prior to transferring equity, it is important to consider the different types of tenancy in which joint owners may hold a property.
The most common of which for married couples is to hold the property as Joint tenants, by doing so they are regarded as owning the whole of the property without any separate share or distinction between them. On the death of one of the joint tenants their share will automatically pass to the surviving tenant, regardless of any provision in the will.
Alternatively the owners may choose to hold the property as Tenants in common, the owners are regarded as having separate and distinct shares, e.g. 50% each. The shares in the property may be left under a will to any beneficiary i.e. your children. It is actually possible for each party to give their share of the property to the children with the right for the surviving spouse/party to live in the property until their death.
For further information, please do not hesitate to contact Mr Amar Sandhu, Marketing Consultant, Lawcomm Solicitors, T: 02380 233708 E:amar.sandhu@lawcomm.co.uk |
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