My spouse and I currently live in a large property that we would like to split into two separate titles to be able to build a new house on the new title plot and rent this out. As the current house is still under mortgage, our mortgage provider has asked that we get legal advice to apply for the title split. Having spoken with a solicitor, it seems the first thing we need to work out is the tax implication of transferring the new title deed into one of our names. Will we need to pay any tax during this process? If so, what could we do to minimise this?

Arthur Weller replies:
Any transfers between husband and wife living together are on a ‘no gain, no loss’ basis, so there should be no tax to pay now. But the transferee takes over whatever was the base cost of the transferor. Additionally, if you are both living in the house as your main residence at the time of the transfer, the transferee takes over the principal private residence history that would have applied to the transferor.