Four transfer of equity FAQs

If you are thinking about transferring equity in a property, it is good to know the answers to the most commonly asked questions before you go ahead.

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1. What is the definition of ‘transfer of equity’

When a person is added or removed to the title deeds of a house, flat or other property, this is known as a transfer of equity. It doesn’t involve a sale and at least one current owner remains on the deeds. It can also mean one business transferring ownership to another. You can transfer equity to a child under the age of 18, although they are not allowed to own their share and it has to be put in a trust deed until they reach adulthood.

2. When is a transfer of equity used?

The most common reasons for a transfer of equity are the breakdown of a relationship, a new relationship, buying someone out, or to save tax by gifting some of your property to a child or other family member. While the process is usually straightforward, the use of a transfer of equity solicitor is recommended.

There are many professional firms, such as
https://www.samconveyancing.co.uk/news/conveyancing/transfer-of-equity-process-3894, with expertise to ensure all documents are correct and the transfer goes through smoothly. Although it is possible to carry out your own transfer of equity, it can be a complex process and can be costly if you get it wrong.

3. Is there stamp duty or any other tax liability?

Although there is no sale as such, stamp duty is sometimes payable when the transfer of equity is due to divorce. Similarly, you may be liable for tax if you transfer equity to anyone other than a spouse or civil partner. The government website advises that if you are not married or in a civil partnership, stamp duty may be payable.

If you want to gift part of your property to a child or other family member, you may have to pay capital gains tax. Again, it is advisable to contact a specialist for advice.

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4. What is the process?

The first step in a transfer of equity is to contact a solicitor, who will take instructions and begin the process of regulatory checks by getting the title deeds of the property from HM Land Registry. If there is a mortgage on the property, the lender will be contacted to see whether there are any restrictions and obtain permission. The identity of those involved in the transfer will be checked before preparing the deed. A fee is payable to HM Land Registry so that the new title deed documents can be registered after all the forms have been completed and signed.