There are times in life when financial accounting for a jointly owned property can be complicated. This may be because a cohabiting couple tie the knot and wish to formalise their interest in the property that they occupy, because someone wishes to invest in property in a tax efficient manner, or because they are future-proofing for inheritance tax reasons.
In any of these situations, a deed of assignment could be a logical consideration. It allows property owners to assign an equitable interest in the property or land to another party. It is a suitable choice when a property is already owned by someone who wishes to assign equitable interest to somebody else.
Who Can Assign Equitable Interest In A Property?
1. A deed of assignment only applies where joint owners of a property are listed on the title deeds as tenants in common. Joint tenants co-own the property with a value of 50% each, whereas tenants in common can have unequal shares in the property.
2. This is an appropriate choice for those who do not wish to change the legal title of the property, and do not wish to involve their mortgage provider in the transfer, as would be the case should they decide to transfer equity.
What Is The Process For Assigning Equitable Interest?
There is a simple legal process that must be followed in order to assign equitable interest in land or property to another party. The first step is to instruct a suitable solicitor, such as Parachute Law who will ask for information about your intentions for the deed, check your identification and draft the deeds for you based upon the information that you have provided. Once you have reviewed the draft and confirmed that it meets your expectations, it will be finalised and provided to you for signature. This signature must be witnessed.
Where the deed is written for a married couple who own a property with an unequal share or receive an unequal income value from the property, a Form 17 must be sent to HMRC. This self-assessment form is used by HMRC for tax reasons and they will also require a copy of the signed deed.
In some instances, an SDLT1 form will need to be submitted, even if the assigning of equitable interest does not attract a Stamp Duty Land Tax payment. You should always seek advice from your solicitor, accountant or other tax specialist to determine whether you should submit this form, based on your individual personal circumstances.
Summary
Assigning equitable interest in a property or land offers tax benefits and eases inheritance tax planning. To ensure that this is carried out in the most appropriate manner, an experienced solicitor should be instructed to support you.
