Transfer ownership of house to wife or spouse

Many of our clients come to us with the same question: How do I add my wife to the deed of my house? . Below, we run through how to transfer ownership to your spouse for tax purposes or to simply add their name onto the legal title, including:

• How to transfer ownership of property to your wife/spouse
• Do you always need to transfer your spouse onto the property to get a tax benefit?
• SDLT and Capital gains tax on transfers of property to spouse. Do you pay tax on a transfer of equity?.

Before progressing with this, it is important to understand the difference between the legal owner of a property and who benefits from the property; such as property income or the right of use.

• Legal owner - the legal owner/s are registered at the Land Registry on the title deeds. You can have a maximum of 4 legal owners registered on the title and they have control over when the property is sold or transferred. Legal owners are also known as nominees or registered owners.
• Beneficial interest - this is "an interest in the economic benefit of property". Your beneficial ownership in property reflects your share of any gain/loss from the property, including rent and profit/loss on sale. You do not have to be a legal owner to be a beneficial owner. Many married couples share the beneficial interest with their partner, but don't share the legal title because if their intention is to share property income in a tax efficient way, then there is no need to change the legal ownership.

How do I add my wife to the deed of my house?

How to transfer ownership of property to your wife: There are many ways to transfer property to your wife/husband so they can get a share of the beneficial ownership. The process depends on whether:

1
Property is in the sole name of one of the married couple

2
Property is in joint names

3
Property hasn't been bought yet

1
Property in sole name

If you already own the property and it is in your sole name, then these are a few options to consider in order to transfer the beneficial interest to your wife/spouse.

In this scenario the intention is to add the wife/husband to the deeds of the property as joint legal owners and to share the beneficial interest in unequal shares. In most cases, the partner is transferred onto the legal title for zero consideration (no additional money changing hands) and at the end of the transfer you jointly own the legal and beneficial interest. Here are some other points to be considered:

• Stamp Duty Land Tax - Click to read what stamp duty land tax is payable on a transfer.
• Deed of Trust - when sharing income from property in unequal shares, you are required to complete a Form 17 to HMRC and provide a deed of trust conforming the beneficial interest split between the joint owners. If you fail to do this, HMRC presumes that income from property is shared equally between the joint owners.
• Mortgage Lender Consent - most mortgage lenders won't allow you to transfer beneficial interest to someone not a party to the mortgage. In these cases you should look to assign the beneficial interest by using a deed of assignment instead.

You can assign beneficial interest to your spouse using a deed of trust or a deed of assignment. A deed of trust will have clauses to include how the property is managed, lived in and possibly sold, however a deed of assignment simply assigns the beneficial interest from one party to the other. Both are deeds and both can be used to assign a benefit in land to your spouse.

HMRC Guidance note states:

"For the starting point in TSEM9160 not to apply there must be a separation of income from property, by way of a valid declaration or deed of trust.

For example, in an interest in possession trust (TSEM1105), the trustees own the trust property, but they are not entitled to the income arising from the property - the beneficiary is. By way of a valid deed, the settlor has specifically given the income from the property to the beneficiary. So the presumption that income follows property does not apply in this instance."

As we see from the HMRC guidance note, the legal owner can use a deed of trust to share the beneficial interest in the property (the right to rental income and capital gain) to their spouse or partner. The points to consider are:

• Stamp duty land tax - If you marry, enter into a civil partnership or set up home together, HMRC states: "You might pay SDLT when you transfer a share in a property to a husband, wife or partner when you do one of the following: marry, enter into a civil partnership, move in together". We explain stamp duty for transfer between marital couples in our article here - transfer of property to your wife attracts stamp duty.
• Beneficial owner has no legal owner rights - unless written into the deed of trust, the beneficial owner has no legal right to force the sale of the property, so they can receive their beneficial interest from a potential capital gain via sale.
• Deed needs to be registered - a deed of trust needs to be registered with a Form B restriction placed over the title deeds at the Land Registry, to protect the non-legal owner from the property being sold without their knowledge.

2
Property owned jointly

If you already own the property jointly, then these are a few options to consider in order to transfer the beneficial interest to your wife/husband.

Much like in the example above, a deed of trust can be used to declare an unequal beneficial interest between the joint owners. Other than the ones raised above, an additional point to consider is if you currently own the property as Joint Tenants or Tenants in Common. 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. You cannot own a property as joint tenants and have a deed of trust.

3
Not purchased property yet

If you have yet to purchase the property, then you can choose to buy the property as tenants in common and draft a deed of trust to reflect unequal shares in the property.