SDLT on Transfer of Equity

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    SDLT on Transfer of Equity

    I am thinking of transferring a BTL property from my sole name into joint names with my wife to save tax. We both already own other property. The outstanding mortgage on the property being transferred is less than £80,000, so the mortgage debt taken on by my wife would be below £40,000, although the property is worth about £200,000. Would there be any stamp duty payable on this transfer of equity?

    #2
    I think there would be none (but see *). The gift part has to be a gift though (although even then transfers between husband and wife are ok), but to be doubly sure make sure you don't do anything to bring that into question (like cash or another property transfer). The mortgage transferral is below limit. And even if not a gift the transfer is below the limit.

    Remember though that there is no CGT now, but when it is sold on the relevant dates and amounts are YOURS transferred and CGT is paid as per the original purchase.

    * But there is the small issue of the new 3% - if it were an outright gift this would not apply. But I have no idea whether the mortgage part would be subject to the 3%. I assume not as you are both assumed to be the owner (even though your wife is not) in terms of the 3% if either of you buy something else, so it would be strange if you were not considered to be already linked to it if transferring between you.

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      #3
      The mortgage lender (probably) needs to consent to the transfer.
      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).

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        #4
        Thank you for your reply. The transfer would be a gift. The government's guidance on the new higher rates of SDLT states that transactions under £40,000 are not subject to the higher rates, so my hope is that this applies to transfers of equity as it does to new purchases.

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          #5
          Wouldn't the transfer of equity be £100,000, i.e. half the property value?

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            #6
            The transfer would be a gift, as such SDLT is only payable on the amount of the mortgage that is transferred.

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              #7
              It wont be a gift if she will be named on the mortgage as she is effectively paying you £40,000 for it. You must also ensure that you haven't transferred property between you before as the values will be linked.

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                #8
                My husband and I have just done a transfer of equity. The calculation for stamp duty is based on the current mortgage value, not the value of the house. So long as the value is under the £40k, no stamp duty is payable. We didn't have to pay any stamp duty even though we have several properties.

                Solicitor did inlcude a clause on the TR1 saying to the effects of 'no money had changed hands'.

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