Transferring Ownership of a House to a Family Member UK
Our guide to a quick house transfer
Transferring a property to a family member can seem daunting, with many considerations. Whether you’re planning your will, looking to move property or wanting to help out your children, every scenario is different. However, property transfer and gifting don’t have to be complicated, and we’re here to simplify that.
Our guide shares how to transfer or gift a property to a family member and the steps you need to take.
Can you transfer property to a family member?
Transferring property to your family depends on their relationship with you, from your spouse/civil partner to your children. These scenarios can differ based on the reasoning and circumstance.
With your spouse or civil partner for newlyweds especially, you may want to transfer ownership of the property and have your partner on the title deeds. This process is through a transfer of equity, with a share of the equity transferred to one or multiple people. Yet, the original owners also stay on the title deeds, ideal for partners to give them an equal amount of the property. The new spouse gains equity in the property through this transfer and will need to pay Stamp Duty Land Tax (SDLT) if the amount acquired is over £125,000.
There are many legal requirements to execute the deed of a gift and add new names to the Land Registry. The first form to fill out is the TR1 Land Registry, which transfers deeds (the whole ownership). For part property transfer, fill out a TP1 instead. An AP1 is also required, changing the property details on the Land Registry.
A conveying solicitor can help you with all the legalities, and if you’re not using one, you’ll require an ID1 form to confirm your identity. Contact your mortgage lender if you haven’t finished paying your mortgage. They’ll ensure the mortgage gets paid with someone else on the title deed.
On the other hand, if you’re looking to transfer property to your children, there are other considerations to make. You may be transferring some of the property equity to your child to help them get on the property ladder or for them to avoid Inheritance Tax later down the line. Transferring the equity to your child is the same with your spouse or civil partner. They’ll need to pay stamp duty if the equity or value of the mortgage is over £125,000 on their received share.
Other than newly married couples or children, joint tenants are another scenario. This term is for two people who own the property equally, such as a married couple or family members. If one of the owners passes, the property goes to the other owner. If you decide to transfer equity to someone else, you must transfer 50% of the property to your partner as they own half of it.
Joint tenants have equal property ownership, whilst tenants in common means owing different shares in the property. Due to this, if one owner passes, the property won’t automatically go to another owner. However, you can pass your share on in the will.
How can property transfer work in divorce or separation?
Circumstances vary the results of a property transfer during a divorce or legal separation. Whether you share joint ownership, one person has more property equity, or one person wants to remain living in the home, each situation needs specialist advice for the best outcome.
Generally speaking, a divorce solicitor can advise whether to remain joint owners, sell the property, or have one person live there and pay the mortgage. They often recommend waiting for a final court order as it’ll lay out the financial agreement of the divorce or separation. By waiting for this, you won’t need to transfer equity back if the judge disagrees with the property equity status.
A common practice, however, is owners switch from joint tenants to tenants in common, with one owner having more equity in the property.
How long can a property transfer to a family member take?
With transferring the property to your family member, we understand you want the process to be as quick as possible. Depending on the speed of your conveyancer (if you’re using one), mortgage providers and third parties, the complicated process takes between 4 to 12 weeks.
You must meet specific procedures to complete the transfer, such as contract exchanges, registration and property searches.
How to gift a house to a family member?
Another form of transferring your property to a family is property gifting, usually done to prevent children or those inheriting the property from paying an Inheritance Tax when you die. Inheritance Tax starts at 40% for properties over £325,000 and reduces if you live seven years after gifting the property. Every year leading up to seven years reduces the total amount of tax. If you pass away between 3-7 years after gifting the property, your children pay a reduced Inheritance Tax, not 40%, known as ‘tapered relief’. Although property gifting benefits your children from Inheritance Tax, you can't live there rent-free.
For spouses or civil partners, if you gift half of the property to your partner rather than transfer equity, the gifter won’t receive any money. However, you won’t be charged a Capital Gains Tax or Stamp Duty for a gift between a married couple or partnership.
You must fill out a Deed of Gift/Transfer of Gift form when property gifting to your child or spouse. TR1 Land registry form will also be filled out for a complete ownership transfer to the family, whilst a TP1 for part of the property. An AP1 form is for the new property details in the Land Registry.
It’s crucial before property gifting to be aware of the risks. Gifting your property to children means they can remove you as a homeowner, and you’ll lose the rights to your property. Whilst gifting to a spouse, you will lose the share you have gifted and won’t have financial control over that share.
Can you sign your house over to a family member
Yes, signing your house over to a family member is possible you will have to go through the house sale process for the transfer of ownership. This can be done for many different reasons, gifting or as a way to keep your property in the family by passing on a property within are the main reasons. However, it's important to take into consideration that the transfer of ownership involves legal issues and financial implications that could cause delays or worse problems within the family. The process usually requires a documentation , such as a transfer deed, changing house deed name is simply a contract that is signed by the owner of the property and the family member it is getting transferred too.
Before you even think about signing a house over to a family member, it is advisable to seek legal advice from an expert to understand the implications that come with selling a house to a family member. Consulting with a local estate agent, attorney or financial advisor can help ensure that the transfer is conducted properly and in compliance with local laws. However if this does not seem fee-sable and you need to sell your house quickly, we are here to buy your house off you, giving you a cash offer in just 7 days
Can my parents sign their house over to me?
Yes, it is possible for parents to sign their house over to their child but they will still have to go through the legal proceedings also known as property transfer or conveyance. This is done to because of structural planning, gifting to family, or passing on property within the family. Like we have mentioned before, you will have to go through the signing of a formal legal document, such as a transfer deed, to officially exchange your ownership to your child.
Is it hard to transfer home ownership to a family member?
Yes it can be hard and also very stressful situation you're about to put yourself in. Sometimes it is better to sell your house with a cash buyer and handing over the cash directly to your kin or putting the money in your will. The house sale process is longer no matter who you're selling it to and can be longer with a family member. We promise a quick house sale process that will be faster than a private sale, as cash buyers we also offer a cash offer in just 7 days!.
Transferring house ownership to family members takes time with multiple documents and laws you have to abide by and this can cause friction in the family. In most cases its easier to sell to another person or company.
What tax is involved when you transfer or gift your property?
Capital Gains Tax is the most significant consideration when gifting your property. This tax is what you pay when you make a profit on a property. This profit is the difference between the property’s value when gifted and the purchase price. The level of tax you pay is on your tax rate. Basic-rate taxpayers pay 18%, whilst higher-rate taxpayers pay 28%.
For gifting properties that aren’t your main home, you may also have to pay Capital Gains Tax as the gifter if you’ve benefitted financially from that property in any way, such as renting it out.
With stamp duty, when transferring equity to a spouse or children, they must pay Stamp Duty Land Tax (SDLT) if the amount gained is over £125,000. However, for gifting, you won’t be charged stamp duty for a married couple or civil partnership.
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