Changing the split of tenants in common after paying stamp duty

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    Changing the split of tenants in common after paying stamp duty

    I am in the process of remortgaging my buy to let that's currently in my sole name - with my friend for us to be tenants in common. Initially with a low split (possibly 75/25) so I know we will need to pay stamp duty. However, over the next couple years she would like to increase her share.

    1) would we then have to pay additional stamp duty as her share increases?
    2) do we need to wait a certain amount of time before an increase?

    Thank you!

    #2
    "Stamp duty" is a transaction tax. You will pay it if the transfer is not a gift or if there is a mortgage. There is no wait-time.

    Are you sure you are not thinking of Capital gains tax? Which you will have to pay regardless of whether this is a gift or not (unless your friend is your spouse)?

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      #3
      Thank you for replying AndrewDod - No it would be a remortgage so not capital gains. If we did a split and she paid stamp duty on her 25% share but then next year wanted to increase her share to 40% by giving me a lump sum for example, would she then need to go back and pay more stamp duty because her share increased?

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        #4
        I think you misunderstand it totally.

        If previously she owned zero, and now owns 25% - that is not just a "remortgage" - it is a transfer of 25% of the capital asset - and a clear CGT event. And capital gains tax is payable on that at Market rate.

        Stamp duty is a trivial part of the tax involved in this sort of transaction.

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          #5
          What is the current value of the whole property for remortgaging ?

          If the transfer of 25% share is valued below £40K , she may not be required to pay any sdlt.

          What is your capital gain on a disposal of 25% share in the property ? You can claim the capital gains personal allowance of £12K .

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