Stamp duty on transfers between spouses
I have owned a property jointly with my husband since 1995. We transferred the mortgage from residential to buy to let in 2002 and now have 3 BTL properties in our portfolio.
My husband is 69 and to remortgage the property we agreed that it will be transferred into my name.
Advice from our mortgage broker was that transfers between husband and wife are exempt from capital gains tax and stamp duty. However, our conveyancing agent has informed me that this is not the case and a stamp duty of £1,450 is payable since the transfer is not by a court order.
Is this correct?
Many thanks in advance for your advice.
Sincerely
Sara
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Member Since July 2013 - Comments: 561
1:26 PM, 21st April 2015, About 11 years ago
Mark,
Not for between spouses! Simon has the same understanding of the rules as me.
Member Since January 2011 - Comments: 12217 - Articles: 1413
1:34 PM, 21st April 2015, About 11 years ago
Reply to the comment left by “Ian Ringrose” at “21/04/2015 – 13:26“:
OK, maybe you’re right, maybe I’m mistaken, but I’d still like to see the official source. It comes from the Russian side of my family, old KGB saying “trust but verify”.
That’s why I recommend professionals LOL
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Member Since July 2013 - Comments: 561
1:50 PM, 21st April 2015, About 11 years ago
https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
Stamp duty is paid on the consideration not the value.
“The consideration can include: cash payments, the value of any outstanding mortgage that the partner acquiring part of the property takes over”
https://www.gov.uk/stamp-duty-land-tax-the-amount-used-to-calculate-whats-payable gives more detail.
Therefore chose a professionals that knows the rules! (Unlike most mortgage brokers!)
Yet anther case when the rich can pay less tax, due to being able pay off the mortgage the day before the change of ownership and remortgage the day after the change. (But get DETAILED advice on how to do it.)
Member Since April 2015 - Comments: 6
2:04 PM, 21st April 2015, About 11 years ago
Mark,
It’s in the Finance Act 2003 Sch 4 para 8,
http://www.legislation.gov.uk/ukpga/2003/14/schedule/4
Member Since January 2011 - Comments: 12217 - Articles: 1413
2:13 PM, 21st April 2015, About 11 years ago
Interesting links, thank you.
My understanding was and still is that that consideration should be full market value of the asset being transferred, otherwise transfers under market value could lead to major issues later down the line, e.g. especially in bankruptcy.
From a practical perspective I can’t see many mortgage lenders agreeing to reduce the value of their covenant by releasing a borrower from liability either.
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Member Since January 2015 - Comments: 21
3:08 PM, 21st April 2015, About 11 years ago
Sorry Mark, but Simon is correct. Assuming no other consideration is involved i.e. you’re not paying your husband for his half share of the property, then the liability to pay stamp duty is his half of the mortgage debt. If you happen to be remortgaging at the same time and raising capital then I don’t think the extra amount being raised in your sole name forms part of the transfer so not liable to SDLT. https://www.gov.uk/sdlt-transferring-ownership-of-land-or-property
Member Since January 2011 - Comments: 12217 - Articles: 1413
3:28 PM, 21st April 2015, About 11 years ago
Reply to the comment left by “John Simpson” at “21/04/2015 – 15:08“:
I love this forum, I learn something new every day. With the amount of time I spend on here I should be quite smart one day 🙂 LOL
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Member Since September 2013 - Comments: 64 - Articles: 1
6:22 PM, 21st April 2015, About 11 years ago
It is correct that if one joint owner transfers their share to the other as a gift there is a potential liability for Stamp Duty (SDLT) if there is an outstanding mortgage on the property at the time of the transfer.
Even if there is a contemporaneous remortgage in the name of the new sole owner, HMRC considers that the transfer of the share is subject to the original mortgage, and the remortgage is deemed to be completed immediately after the transfer.
However if I read the rules correctly SDLT will be calculated on the amount outstanding on the mortgage apportioned to the share being transferred i.e. if you own the property 50:50 then half the amount outstanding, and if that is over the SDLT threshold then duty would be payable.
Comments: 3
7:33 PM, 21st April 2015, About 11 years ago
Dear all, thank you for your tremendous input and advice. I have now taken this onboard and changed my mortgage broker. Will remortgage jointly with one that accept over 65, with only my income used in the evaluation by the new lender
Member Since January 2011 - Comments: 12217 - Articles: 1413
7:34 PM, 21st April 2015, About 11 years ago
I still can’t see how this can be right. Aren’t all mortgages a joint and several liability? If they are how can a person be deemed to own half a mortgages? How is that any different to digging half a hole?
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