How can equity in a property be transferred?
There are occasions when transferring equity – the legal term for how much of your property you own – in your home to another person makes sense for your finances or circumstances. Although you can technically transfer equity in your property to anyone of your choosing, it is generally most common to transfer it to your spouse or partner.
You may choose to do this for a variety of reasons. It may be that you are getting married and wish to share your property with your spouse; conversely, you may be seeking a divorce or separation, and one partner is transferring their share of the house to the other.
Another reason is that it can often make good financial sense for you as a couple. Considerable savings can be made in terms of inheritance tax or capital gains tax, for example, if one of you pays a lower rate of tax. Further information about the financial implications of transferring equity from a property can be found on the government website:
Other common reasons for transferring equity include gifting a share of your home to adult children or other family members. This could be a full (gifting the entire property) or part (retaining a share of the property) transfer.
How do you transfer equity in a property?
Two types of legal joint ownership can apply. You may choose to be joint tenants, whereby two people each have an equal share in the property; alternatively, you may opt for being tenants in common, whereby you each own a different share of the property such as 60% and 40%. This can be suitable if one person has already contributed more to the purchase; for example, they may have put down the deposit.
Seeking legal advice from a specialist transfer of equity solicitor such as https://www.parachutelaw.co.uk/transfer-of-equity-solicitor can make the process of deciding which ownership option is right for your circumstances and drafting a suitable contract much easier.
When the transfer has been completed, the deed must be registered with HM Land Registry.