transfer of equity

[martyn61]

Hello everybody

Have a tax question

loooking at spliting up letting business with my business partner the company is just a simple partnership acting as soletraders

we have six lets all never been lived in by ourselves i own 2 outright ad the other four are in joint names

i want to transfer equity of one of the ones in my sole name and 2 of the others in joint names to my business partner, and my partner will transfer the equity in the other 2 shared properties into my name.

This way we can both go our seperate ways.

there is no moneys to change hands just the names on the deeds.

can this be done just by gifting to avoid cgt.

Regards martyn

[Telometer]

Is this a company (as you state) or a partnership (as you state) or in fact is it just two of you owning 50% of each property?

Assuming it's joint ownership (or even a partnership) you should be able to do this swap free of CGT. There may be SDLT to pay. If it's a company then it's going to be horribly complicated.

You need a good solicitor to do the conveyancing who has a partner who is a tax specialist in order to get the comfort you need.

Don't try to do it yourself, you are already confused.

[martyn61]

Hi

Not a registered limited company, just a partnership with nothing in writing.

property 1/2/3/4 are 50/50 on the land registery

property 5/6 are in my sole name

we need to split the properties so i sign over to my partner has p1 p2 and p5

i will keep p6 and have p3/p4 signed over to me.

this is an amicable split we are both happy with

Had a brief meeting with a solicitor, who says the properties have to have a value to complete transfer TR1 form.

All properties are approx 80k

i understand that if a value is given this will attract cgt and sdlt
even though no monies are changing hands.

do they really need a value ?.

[Telometer]

Need to understand a bit more.

You have 6 properties worth 80k each. 4 are in joint names and 2 in your name, so your friend has 160k worth and you have 320k worth. Following the split you will have 240k each. Really? You seem to have lost out here. Or is there really a joint ownership assumed of the properties you own alone.

[martyn61]

hi

yes the two that are just in my name are asumed to be 50/50

due to the locations i can only keep one that is in my sole name.
the purchase cost for the 6 was in the region of 180k, 30k each
so if we have to put a value of 80k each to transfer

if we do 4 this year and the other next year it will look soething like this if we have to put a value of 80k to transfer.

4 * 80 = 320 - 120 = gain of 200 less 20k allowance = 180k@18%

this generates a cgt bill for 32,400 even though no monies have changed hands, this is akin to paying cgt in advance of any true sale.

can we just not gift to each other i understand this then involves insolvancy law.

which is not a problem as we are both solvent

enjoy the weekend

regards martyn

[Telometer]

As you both own all the proeprties beneficially 50:50 you should be able to exchange your interests free of CGT.

http://www.hmrc.gov.uk/manuals/cg4manual/cg73000.htm

As for SDLT, I have a suspicion it will be payable at 3% on £480k. £14.4k bill. With luck Jeffrey will confirm.

As I mentioned before "You need a good solicitor to do the conveyancing who has a partner who is a tax specialist in order to get the comfort you need. "

[jeffrey]

SDLT falls due only on purchase price + VAT (if any) added thereto. If this exceeds £250 000 but does not exceed £500 000, it's 3% as posted.