Additional stamp duty on transfer of equity when remortgaging

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    #1

    Additional stamp duty on transfer of equity when remortgaging

    I am about to remortgage a residential property to BTL which is solely in my name at the moment. But want to gift a % of the equity to my wife to be more tax efficient in the future as well. We own other properties as tenants in common.

    - There is no stamp duty until march 2020 so we can totally ignore that.
    - Can someone confirm whether she would need to pay additional stamp duty (3%) ? or is it dependent on how much % share I give her?


    Oddly my solicitor refused to answer me, they can only inform me of stamp duty due if any once I fill up the forms!

    Appreciate your comments
    Tags: None
    #2
    The surcharge will apply because your wife owns an interest in another property.
    For SDLT purposes the transaction will take place at a calculation of the share she is gifted in the property as applied to the joint mortgage she is taking on as consideration.

    So if you gift 10% of the property, the transaction will take place at 10% of the mortgage value for SDLT purposes.
    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).

    Comment

      #3
      If you gift her under 40k's worth of equity then it will be SDLT free (unless you have already gifted her equity in other properties). If you gift her over 40k then I believe you will pay 3% on the entire amount.

      Comment

        #4
        You should pay a RICS surveyor for a statement of the current market valuation for the property. Then you can gift a % of the property ( below £40K value ) to your spouse.

        Comment

          #5
          thank you for your replies.

          Is it 40k of the total value of the property or the mortgage value?

          example-
          property value : £200k
          outstanding mortgage : £150k

          1) 40k in 150k is 26.66%
          share I can gift to wife before triggering additional stamp duty

          OR

          2) 40k in 200k is 20%
          share I can gift to wife before triggering additional stamp duty

          Comment

            #6
            Option 1.
            The consideration is the cost of the share of the mortgage your wife is taking on.
            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 like

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