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Surgery ownership

I am in a two-GP partnership. The surgery is owned jointly and equally by a retired partner and I and we both have mortgages on it. The retired partner wishes to sell their share to my current partner. Instead of doing this, my partner and I propose to make the partnership the actual owner to prevent the issue of sale recurring whenever a partner leaves. We are looking for a lender to buy out the former partner and I and to make a loan to the partnership. Is this a sound proposal? If the transaction goes ahead then what happens when my partner or I leave? Will either of us own a share in the building and be entitled to sell it?

It is not as straightforward to chop and change the shares of ownership as you suggest. The owners for the time being will assume full liability for all outgoings associated with the property - and will also be entitled to receive any gain (profit).

Indeed, if they were to elect not to do so and to leave the gain for others, they would technically be making a gift that would complicate their own personal estates. Your accountant can advise about capital gains tax.

It is possible to transfer the title of the property into a company with individual partners holding shares that are transferred as they leave the partnership. This would avoid the need to transfer the names on the title on each occasion.

However, the disadvantage is that a full stamp duty land tax (SDLT) charge would be payable at the time of the change of title name and a 0.5 per cent SDLT charge would be made on the value of transfer of subsequent shares.

SDLT does not currently apply to transfers between partners. Your funding arrangements would need to be reconsidered and quite possibly, the shareholders of the company would also be required to give personal guarantees to the lender.

If so, each time a partner changes, there would need to be more paperwork with regard to the transfer of guarantees. Also, additional funding may need to be raised to buy out the equity of the outgoing shareholder.

But you are likely to be better off maintaining the status quo.

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