SDLT on transfer of mortgaged property?

SDLT on transfer of mortgaged property?

10:26 AM, 25th March 2019, About 4 years ago 3

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I understand that when beneficial interest in property is transferred between spouses the amount of mortgage liability assumed by the transferee is regarded as consideration and SDLT is payable on any amount over the threshold of £125000, but can anyone tell me what happens when:
• Spouses hold the property as tenants in common
• the mortgage is in their joint names with joint and several liability i.e. each party is liable for the whole debt
• the share of ownership is varied to optimise the use of the basic rate tax band

I have thought of two possible answers but is either of them correct?

1. there is no consideration and hence no SDLT payable as the transferee has not assumed any additional liability in relation to the mortgage
2. HMRC would argue that the transferee has effectively taken over responsibility for the share of the mortgage corresponding to the share of ownership transferred i.e. ignoring the joint and several provision

Would the answer be any different if one spouse takes 100% of the beneficial ownership, having previously owned 50%?

Many thanks



Neil Patterson View Profile

10:32 AM, 25th March 2019, About 4 years ago

Hi David,

Please see >>

There is no CGT on transfers between spouses, but there is Stamp Duty if there is a mortgage, because mortgages are are deemed to be a consideration on the basis that a liability cannot be gifted according to HMRC rules – see example 2 on the HMRC website via THIS LINK >>

Prior to the change of policy, the maximum consideration which could be transferred to a spouse without incurring the additional rate of Stamp Duty was £40,000. However, following the change there is no additional rate of Stamp Duty payable on transfers between spouses at all. The normal rate of Stamp Duty ONLY becomes payable if the mortgage consideration exceeds £125,000.

Mark Alexander - Founder of Property118 View Profile

13:11 PM, 25th March 2019, About 4 years ago

Hi David

I think there is a stronger argument for the first of your two suggestions, but to be certain I would want to take Counsel's opinion or at the very least professional legal advice if I were you.

I certainly wouldn't pin too much hope on well meaning but unqualified comments on an internet forum in favour of spending a few hundred pounds to have a professionally qualified and regulated person putting their Professional Indemnity insurance on the line to back their advice.

wanda wang

20:44 PM, 25th March 2019, About 4 years ago

I did 100% to 0% transfer between me and my husband. there is no problem with lender.

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