SDLT for a Declaration of Trust

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    SDLT for a Declaration of Trust

    Morning all,

    I've read through some recent posts on this topic and it seems that without specific details, it's all guesswork, so I've tried to make my post more specific.

    Here is my situation:
    I bought a BTL property in 2009 which has recently been valued at around £300-350,000 and it has a £41,000 mortgage in my sole name and I am the sole owner. I got married in April 2018 and my accountant has advised that I put in place a declaration of trust and complete a form 17 to pass 99% of the rent to my wife to make use of her 20% tax allowance as I am a 40% tax payer. This would be via a gift and my wife would pay no money to me for this. Fairly straightforward. However, the mortgage fixed rate comes to an end in November and I am looking to remortgage the property to withdraw an additional £200,000 in equity in order to purchase another property, making the total mortgage approx £241,000.

    I'm happy to add my wife onto the new mortgage but should I complete a declaration of trust before the remortgaging takes place as what SDLT would be payable before and after the remortgaging? I believe this would be £0 when the balance of the mortgage is £41,000, but what if then I (or we) remortgage the property for a higher amount of £241,000?

    I guess simply I have 3 questions:
    1 - what SDLT would be payable when the mortgage is £41,000
    2 - what SDLT would be payable when the mortgage is £241,000
    3 - should I complete the DoT/Form 17 before or after the remortgage and would HMRC try and sting me for this?

    I think I should probably complete the DoT/Form 17 while the mortgage is at £41,000 and pay whatever is due, then make a joint mortgage application. Is this the right course of action?

    Do HMRC only take into the consideration the mortgage amount at the time when the declaration of trust and form 17 are submitted, so it doesn't matter what you do after? I assume that this would be the case because what if you bought a property in January for £100K then the day after you paid the SDLT the value went up 100%, they wouldn't come back to you asking you to pay more! Although they might try.

    Thank you for your help


    If your wife becomes joint owner and joins the current mortgage, the consideration for the transaction is below £40k, so there's no SDLT.
    If you and your wife then remortgage, there's no SDLT to pay for that transaction.
    When you buy the next property with the equity, you'll pay the surcharged SDLT for that property.

    1 - The transaction has a consideration of £20,500.00 for SDLT purposes (because it's a joint mortgage).
    2 - None, the ownership isn't changing.
    3 - I think your accountant is being very sensible about the sequence.

    None of this addresses whether your lender will accept your wife as a joint mortgagee on the current loan, so that's possibly the first thing to establish.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


      1. Gifting your wife 50% interest in a property with £41,000 outstanding mortgage, should mean the "consideration" for sdlt will be £20,500 and your transfer is below the threshold for charging sdlt.

      2. For mortgage of £241,000, the consideration for sdlt may be £120,500 and your wife may be expected to pay 0% or 3% if she is not treated as a first time buyer.

      3. You have to get the gift transfer done whilst your mortgage is down at £41,000 if you want to dodge the sdlt.
      You cannot submit a form 17 to tax office until after the property is registered in joint names as "tenants in common"..


        Would their be a SDLT consideration at all at the point of remortgage?


          No. Sdlt is payable by the buyer of a property or recipient of a transfer by gift. It is not payable for "re-mortgage situation".


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