inheritance tax

In a nutshell, a transfer of equity is when a person is either added or removed from a legal title. There are lots of reasons why people transfer equity. It may be that they wish to add a family member to the title. Or a couple who have separated may want to transfer the property to just one of them. Or perhaps the property may need to be put into the name of the deceased owner’s beneficiary.

What is equity?

The word ‘equity’ refers to how much of the property you own. So, the market value of the property minus any outstanding secured loans or mortgages.

Sometimes, it is necessary for one party to pay a sum of money to another party for a share of the equity. In order to raise the funds necessary to buy out the other owner’s share; the property can be mortgaged (or re-mortgaged) at the same time as the transfer.

Is it straight forward?

Although a transfer of equity seems straight forward, depending on the circumstances, sometimes they can be more complex than first anticipated.

For example, if the property is leasehold, it is usually necessary for the Landlord or Management Company to give consent to the transfer. Often, the implications of and the circumstances surrounding the transfer, make transfers more complicated than you might expect. Especially when gifting property.

Some transfers impact on Capital Gains Tax or Stamp Duty Land Tax liabilities too, so it is important to take some financial advice to ensure that the transfer of equity is the right route to take.

Once the transfer has completed, the title is updated at the Land Registry and any name changes or mortgages are recorded formally.

If you would like more information on transfers of equity feel free to give me a call on 01332 364436. Or drop me an email to k.holmes@timms-law.com.