How does a transfer of equity work on a rental property?
A transfer of equity changes who owns a property without selling it on the open market, for example adding a spouse to the title or removing a former partner. It needs a Land Registry transfer and usually the lender's consent. Transfers between spouses are free of CGT, but Stamp Duty can apply where mortgage debt is taken on.
Read more in our guide: Selling a property portfolio
Tax on common transfers
| Transfer | CGT / SDLT |
|---|---|
| To spouse living together | No gain, no loss / SDLT on any share of debt taken on |
| On separation | No gain, no loss for up to 3 tax years after separation, or longer under a court order / SDLT exempt under a court order |
| To a child or partner | Market value disposal / SDLT on any share of debt taken on |
| Into a company | Market value disposal / SDLT on market value |
When landlords use it
Common reasons include sharing rental income with a lower-earning spouse, removing a partner after a separation, bringing an adult child into the ownership, and preparing for a sale so each owner can use their own annual exempt amount and basic rate band.
The process
- Get the lender's consent; the new owner may need to pass affordability checks.
- A solicitor prepares a transfer (form TR1) and a declaration of trust if shares are unequal.
- Pay any SDLT and register the change at HM Land Registry.
- Tell HMRC how income is split; spouses use Form 17 for unequal shares.
Tax points to check
Between spouses and civil partners living together, transfers are at no gain, no loss, so the receiving spouse takes on the original base cost. Outside marriage, the transfer is a market value disposal. Stamp Duty is charged on any payment and on the share of mortgage debt the new owner takes on, and the 5% surcharge may apply if they own other property. See joint ownership.
Timing before a sale
A transfer to a spouse shortly before a sale can be effective for CGT, but it must be genuine: the spouse must really own the share and receive their part of the proceeds. HMRC can challenge arrangements where the transferee is a nominee.
Official Sources and Further Reading
- GOV.UK: Capital Gains Tax for business and property: gifts to spouse
- GOV.UK: Stamp Duty Land Tax: transfers of ownership
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
A transfer of equity changes who owns a property without selling it on the open market, for example adding a spouse to the title or removing a former partner. It needs a Land Registry transfer and usually the lender's consent. Transfers between spouses are free of CGT, but Stamp Duty can apply where mortgage debt is taken on.
The tenancy continues, but tenants should be given the new landlord's name and address, and the deposit scheme and agent records updated.
Usually not. Most mortgages forbid any change of ownership without consent, and the Land Registry will not register it if there is a restriction.
For tax, a declaration of trust can change beneficial shares without changing the legal title, but it should be done properly and HMRC told where required.
Thinking About Selling Your Portfolio?
Ask for a no-obligation portfolio appraisal, or call us to talk through your options in confidence.