Stamp duty if re-mortgaging (adding person to mortgage)?
Discussion
Hi guys, my (now wife) girlfriend and I bought our house last year and she is owner on the owner on Land Registry and Mortage. We did this as at the time my divorce had not been finalised.
We now want to re-mortgage and add me to the ownership/mortgage.
I am worried after surfing around that this will mean that we will have to pay Stamp Duty on 50% of the value that my wife is "selling" to me.
Is this the case? Surely not? SD on 50% would be a BIG number!
Cheers
Mike
We now want to re-mortgage and add me to the ownership/mortgage.
I am worried after surfing around that this will mean that we will have to pay Stamp Duty on 50% of the value that my wife is "selling" to me.
Is this the case? Surely not? SD on 50% would be a BIG number!
Cheers
Mike
t load of mortage and now "owning" the house!It's called a transfer of equity and, yes, I'm afraid it's considered to be a transfer of land that attracts SDLT. Or at least it did when my wife and I did it a few years ago.
It's not on 50% of the value of the house though - I seem to remember that account has to be taken of the size of the mortgage over the land too.
And bear in mind that SDLT isn't payable unless the notional value of the share being transferred is greater than £125K.
Any halfway-competent property lawyer will be able to tell you straightaway how the value of the share being transferred is valued and what that means in terms of SDLT.
It's not on 50% of the value of the house though - I seem to remember that account has to be taken of the size of the mortgage over the land too.
And bear in mind that SDLT isn't payable unless the notional value of the share being transferred is greater than £125K.
Any halfway-competent property lawyer will be able to tell you straightaway how the value of the share being transferred is valued and what that means in terms of SDLT.
Lurking Lawyer said:
It's called a transfer of equity and, yes, I'm afraid it's considered to be a transfer of land that attracts SDLT. Or at least it did when my wife and I did it a few years ago.
It's not on 50% of the value of the house though - I seem to remember that account has to be taken of the size of the mortgage over the land too.
And bear in mind that SDLT isn't payable unless the notional value of the share being transferred is greater than £125K.
Any halfway-competent property lawyer will be able to tell you straightaway how the value of the share being transferred is valued and what that means in terms of SDLT.
Hmm does this apply between husband & wife? Surely she can just gift him half the equity in the house? If it is eligible for SDLT because its more than 125K then maybe look at doing it in chunks across multiple tax years. SDLT is based on an indivisual transaction so if you spread it out it may be you can get around the thing that way.It's not on 50% of the value of the house though - I seem to remember that account has to be taken of the size of the mortgage over the land too.
And bear in mind that SDLT isn't payable unless the notional value of the share being transferred is greater than £125K.
Any halfway-competent property lawyer will be able to tell you straightaway how the value of the share being transferred is valued and what that means in terms of SDLT.
Because its a transfer between "connected parties" there is probably a form you need to fill in that will trigger a valuation from a district valuer. Bound to be something on the HMRC site about this.
Edited by Iain328 on Friday 8th January 22:54
It's not a straight 50% of the property value, the amount of SDLT you have to pay will be directly linked to the size of the mortgage.
This:
Taken from here http://www.hmrc.gov.uk/sdlt/transaction/transfer-o...
This:
HMRC said:
Example 2 (SDLT payable even though no money changes hands)
Richard King is the owner of a property valued at £500,000. The equity amounts to £100,000 and there is an outstanding mortgage of £400,000.
Richard transfers half the property to his wife Liz when they marry and in turn she takes on half the mortgage of £200,000.
SDLT is charged on the amount paid for a property or the amount of 'consideration' given. By taking liability for the mortgage Liz has given 'consideration' of £200,000 for her share of the property and so SDLT is charged on that amount.
The amount of the equity is not included in the calculation as SDLT is only charged on the consideration given.
SDLT is charged at 1% on £200,000 so Liz will pay £2,000 SDLT and notify HMRC of the transfer by completing an SDLT return.
Is what would apply in your case I think.Richard King is the owner of a property valued at £500,000. The equity amounts to £100,000 and there is an outstanding mortgage of £400,000.
Richard transfers half the property to his wife Liz when they marry and in turn she takes on half the mortgage of £200,000.
SDLT is charged on the amount paid for a property or the amount of 'consideration' given. By taking liability for the mortgage Liz has given 'consideration' of £200,000 for her share of the property and so SDLT is charged on that amount.
The amount of the equity is not included in the calculation as SDLT is only charged on the consideration given.
SDLT is charged at 1% on £200,000 so Liz will pay £2,000 SDLT and notify HMRC of the transfer by completing an SDLT return.
Taken from here http://www.hmrc.gov.uk/sdlt/transaction/transfer-o...
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