Transfer of equity is the process of adding or removing someone from the title deeds of a property and by doing so this essentially removes their ownership of the property. Transfer of equity is different from a sale of the property as at least one of the original owners of the property will stay the same. However, the list of all the owners of the property will change. In this article, transfer of equity to brother, we take a look at the mechanism involved.
Free Initial Telephone Discussion
For a free initial discussion on how we can help you with the legal aspects of transferring equity in a property to your brother, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure the transfer is seamless and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
Why would you want to transfer the equity in a property?
This is sometimes done to minimise the amount of Inheritance Tax (IHT) that will be due on the individual’s Estate after their death. As long as you live for seven years following the transfer, the property will not be considered as part of your Estate.
Or you might have different motivation – for example, you may have included your brother in your Will and you might want to help by providing him with his inheritance early.
It is possible to transfer the ownership of a property to your brother as a gift, meaning no money exchanges hands. This differs to a Transfer of Equity, where the owner remains on the title and simply adds someone else to it.
To transfer a property as a gift, you need to fill in a TR1 form and send it to the Land Registry, along with an AP1 form. If either side is not using a Solicitor or Conveyancer, an ID1 form will also be needed.
However, there are a lot of implications of gifting a property, which is why it is incredibly important to get specialist advice from an Estate planning expert first.
Along with the tax considerations, there are other risks that you need to be aware of. For instance, you will no longer be the legal owner of the property, so your brother could theoretically evict you. You might think this would never happen, but it may occur due to factors that are outside of his control. For instance, if he ever faces a divorce the property may need to be sold to raise funds, and his ex may even have a financial claim over it.
What is the difference between the legal owner and someone with a beneficial interest?
Legal owners, sometimes known as nominees or registered owners will be registered at the land registry on the title deeds. There can be up to 4 legal owners of a house and they will ultimately have responsibility when it comes to selling or transferring the property.
A beneficial interest is an interest in the economic benefit of the property. You don’t have to be a legal owner to be a beneficial owner
What are the steps involved?
The process involved in transferring equity to your brother will depend upon your prevailing circumstances. If the property is in your sole name, you will be looking to transfer title to your brother so that he is added to the deeds of the property so you become joint legal owners and share the beneficial interest in unequal shares. Normally, no money changes hands and at the end of the transfer, you jointly own the legal and beneficial interest. There may be other considerations including lender consent, stamp duty liabilities and providing a deed of trust to HMRC.
If you already own the property jointly with your brother and wish to transfer the beneficial interest in the property to him, you will need to create a Deed of Trust. If you own the property as joint tenants then you’ll need to change the ownership to tenants in common before you can register the deed of trust. This is due to the fact that you cannot own a property as joint tenants and have a deed of trust.
If the property is yet to be purchased, you can choose to buy the property as tenants in common and draft a deed of trust to reflect unequal shares in the property.
When all parties involved in the transfer of equity are in agreement, a ‘Deed of Transfer’ is drafted for you both to sign and any existing mortgage formalities will be completed. After the Deed of Transfer has been signed, a Stamp Duty Land Tax Return may need to be completed. This will need to be submitted irrespective of whether any stamp duty is owed. Finally, all interests and charges over the property will be registered at the land registry.
How we can help
We have a proven track-record of helping clients transfer the equity in their property to their brother. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Residential Conveyancing Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of saving you money and ensuring you achieve a positive outcome.
To speak to our Residential solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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