Selling Affordable Home to fiancée/spouse & tax?

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Lizard

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My fiance is in a position to clear my Affordable Housing mortgage (lucky me). However redeeming the mortgage early (by 10 years in my case) does not mean we would be free of the Council's regulations (which last 20 years).

The only way to sever links with the Council is to sell.

So I'm going to sell the property to my fiance. Or maybe I should wait until we are married?

My question is this: Which is cheaper and/or less complicated (in terms of taxation): selling to a spouse, or selling to a non-spouse/fiance?

Thanks.
 
Hi Lizard

Tell us what you are trying to achieve here.

To avoid a clawback?
To sell the house?
To pay off the mortgage?

Brendan
 
The OP has an affordable house so the clawback lasts 20 years unless he sells it.

So if he sells it now and there is no profit there is no clawback.

If he keeps it and then sells it in 5 years time at a profit then there will be a clawback.
 
I don't know the details of the rules, but I would imagine that selling to your fiancée would be the cleanest.

Selling to your wife would probably mean that you still own it or have an interest in it. But it would depend on the rules.

There are no tax implications if you sell it at market value. Other than stamp duty of 1%. You may be exempt from this if you are selling it to your wife.

Brendan
 
We need to know
1.Value now(open market)
2.Purchase price
3.% discount,or full value at purchase date.

@Joe90 After the tenth year,the clawback reduces by 10% a year,so depending on a lot of factors,it may or may not be advantageous to wait.
 
Last edited by a moderator:
Brendan Burgess said:
Hi Lizard

Tell us what you are trying to achieve here.

To avoid a clawback?
To sell the house?
To pay off the mortgage?

Brendan
Click to expand...
Pay off mortgage early and also sever link with council. Nearly-husband wants to pay off my mortgage and rent out my apartment in order to have an income. But the council disapproves of mortgage holders renting out within 20 years. Selling it really is the only way.
 
Brendan Burgess said:
I don't know the details of the rules, but I would imagine that selling to your fiancée would be the cleanest.

Selling to your wife would probably mean that you still own it or have an interest in it. But it would depend on the rules.

There are no tax implications if you sell it at market value. Other than stamp duty of 1%. You may be exempt from this if you are selling it to your wife.

Brendan
Click to expand...
So, if I wait until we are married, spouse would be exempt from stamp duty. It would be a straightforward transaction. Gift tax? Do spouses sell to one another?
 
vandriver said:
We need to know
1.Value now(open market)
2.Purchase price
3.% discount,or full value at purchase date.

@Joe90 After the tenth year,the clawback reduces by 10% a year,so depending on a lot of factors,it may or may not be advantageous to wait.
Click to expand...
I think value of my apt is about 150k. I bought it for 177k. So no clawback.
 
Lizard said:
So, if I wait until we are married, spouse would be exempt from stamp duty. It would be a straightforward transaction. Gift tax? Do spouses sell to one another?
Click to expand...
just read this again, so selling to spouse is not straightforward. I should sell to fiance, and all he would be liable for is stamp duty. I would be selling under market value.
 
If you're selling under market value then your fiancé will be liable to gift tax for the difference.
 
Lizard said:
Pay off mortgage early and also sever link with council. Nearly-husband wants to pay off my mortgage and rent out my apartment in order to have an income. But the council disapproves of mortgage holders renting out within 20 years. Selling it really is the only way.
Click to expand...

Have you tried talking to the council and just renting it out.

What happens if he just pays off the mortgage for you?

Do the council allow the house to be transferred to both names.
 
Bronte said:
Have you tried talking to the council and just renting it out.

What happens if he just pays off the mortgage for you?

Do the council allow the house to be transferred to both names.
Click to expand...
Council turns a blind eye to renting, but if there are any problems with tenants.... I just dont want the council looming over me.
If he pays off the mortgage we are still tied to the council, 20 year contract, whether mortgage is paid off or not before that time.
 
Lizard said:
thank you, and if I sell it under market value to a husband, will he have to pay gift tax?
Click to expand...
You won't be allowed to sell the house below market value,as the council sends out a valuer.(Only complication could be if the valuer values the property at above the purchase price)
 
vandriver said:
You won't be allowed to sell the house below market value,as the council sends out a valuer.(Only complication could be if the valuer values the property at above the purchase price)
Click to expand...
ok thank you. Surely I am entitled to seek more than one valuation. Or is the council's valuation the one that counts?
 
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