Think of your Residential, Buy-to-let or Commercial property as a loaf of bread and then mentally slice the loaf. You are now thinking of your property in terms of equity slices.
We're presenting at the National Landlord Investment Show
via a virtual seminar on the 3rd November.
When you start thinking of your property assets in this way, many possibilities open up. The slices, which we help you to create by way of changes to your title deeds, enable you to do many different things.
Depending on the type of property which is being equity sliced there are a number of examples and benefits which could interest you.
The mechanism of Equity Slicing is by structured variation to the Title Deeds to a Freehold / Leasehold property and creating a Deed of Trust setting out what benefits and obligations accrue to the owner & seller of the equity slice.
John & Mary have a Buy-to-let property which they purchased for £200,000. They have owned the property a number of years and it's now worth £400,000. They have decided that they wish to take out some capital from the property for their retirement but don't want a mortgage because they feel that the monthly repayments will eat up all the cash-flow from the rental income they receive.
Selling the entire property is not desirable to them because this will release more capital than they need right now and they would then need to find another source of income to replace the rental income from the property. Also the Capital Gains Tax estimate was looking mighty.
They decided to choose equity slicing as they could sell just 8.75% of the property in an Equity Slice for £35,000. Because the slice sold was creating a gain below John & Mary's annual CGT tax allowance, they received the payment tax free. The rental income for the property is now split 8.75% Investor / 91.25% John & Mary. They have the cash but they don't have mortgage repayments, interest payments or capital gains taxes to pay.
John & Mary are now considering if they want to do this every couple of years or so for the next 20 years - after all, this property was always intended to be their pension in retirement, and now that's what it is!
In this example John & Mary would pay Equity Slice Sale Fees to The Slice Ltd of £683 (1.95%*) plus Legal Conveyancing Fees of approximately £750. Total £1433 + VAT. When the property is sold in it's entirety at some later date the investor would be entitled to 8.75% of the sale proceeds.
*Correct at date of publication: 16/09/2020 - Special Offer Rate (Quote Code SL1CE when contacting us).