TAX TIP OF THE WEEK - Transfer property to spouse?

Could you transfer your buy to let property to your spouse to save tax?

Over the past few years, landlords have been targeted by the government which has introduced more and more tax legislation on rental profits. 😩

If you are a high-rate taxpayer with a hefty mortgage on the property then you can even end up in a situation where the tax payable is more than the cash flow generated from the property. 📉

One possible way to remedy this situation is to transfer a portion of the property to your spouse if they are a basic rate taxpayer. This has the double effect of the income being taxed at a lower rate and the mortgage interest not being restricted. 🤞

The good news is that transfers between spouses are exempt from capital gains tax, meaning all that is required is some legal work by your solicitor. 📝

However, the situation is a bit more tricky when there is a mortgage on the property. As there would have been deemed to be a transfer of consideration equivalent to the amount of the mortgage then stamp duty could become payable.

So in this situation, it would be advisable to transfer a proportion of the property, equivalent to the mortgage value of up to £40k.

This would be within the stamp duty nil rate band so the transfer could be made tax free 🚀

Hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist.