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Stamp Duty - Transfer of Equity

Hi everyone - hoping someone can give me a definitive answer as my solicitor and financial adviser (and google/hmrc!) are all giving me conflicting information!

Me and my partner are not married but are cohabiting.
Partner owns 2 houses (both mortgaged before the April 2016 Stamp duty changes) in sole name only. 1 house is rented out and 1 is main residence, where we both live.
I own no properties,

The fixed rate mortgage term is up on the main residence so it is being remortgaged, however we decided to rermortgage in joint names instead of just my partners name. Solicitor says this is a transfer of equity.

Value of house is 270k with a remortgage value of 202k. I am not paying my partner for my half of the 68k equity in the house - this is being gifted to me by my partner.

At the end of the transaction my partner will still own 2 houses, 1 in sole name, 1 in joint with me. I will then own 1 property in joint names with my partner.

Is the transaction subject to stamp duty - and if so would it be at the higher rate?

Please help!!

Thanks

Comments

  • POPPYOSCAR
    POPPYOSCAR Posts: 14,897
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    My understanding is because there is a mortgage involved you will be liable for stamp duty.

    http://www.coles-law.co.uk/news/tax-for-transferring-a-property
  • Thanks for the reply - I did see that page whilst searching Google, however if my half of the 202k mortgage is 101k, that is lower than the 125k threshold so would be 0% - unless it would be charged at higher rate stamp duty because my partner owned 2 properties even though i only own 1? Then it sounds like it'd be 3% of 101k?
  • kinger101
    kinger101 Posts: 6,273
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    edited 7 September 2017 at 7:59PM
    My interpretation would be that no SDLT would be payable on this.

    Firstly, I'll tackle the question of the higher rate (as this applies to all transactions over £40K)

    According to FA 2016 S128 para 2(3)

    In the case of a transaction where there are two or more purchasers—

    (a) take one of the purchasers and determine, having regard to that purchaser only, whether the transaction falls within any of paragraphs 3 to 7, and
    (b) do the same with each of the other purchasers. If the transaction falls within any of those paragraphs when having regard to any one of the purchasers it is a “higher rates transaction” (otherwise it is not).


    You are gaining an interest in your first and only property, so the additional SDLT does not apply. Your other half is not purchasing a property at all so the SDLT does not apply to them either

    You're under the rules for normal SDLT, but as the consideration is half of the mortgage debt (£101K), then you're below the £125K threshold.

    Really you need an accountant or tax advisor to go over this though and tell you if I'm talking rubbish or not. I'd never trust tax advice from a conveyancing solicitor or financial advisor. Or some random bloke on the internet.
    "Real knowledge is to know the extent of one's ignorance" - Confucius
  • POPPYOSCAR
    POPPYOSCAR Posts: 14,897
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    digitalguy wrote: »
    Thanks for the reply - I did see that page whilst searching Google, however if my half of the 202k mortgage is 101k, that is lower than the 125k threshold so would be 0% - unless it would be charged at higher rate stamp duty because my partner owned 2 properties even though i only own 1? Then it sounds like it'd be 3% of 101k?

    I cannot see why you would have to pay the higher rate as it would be your first property.

    What have HMRC said?
  • 00ec25
    00ec25 Posts: 9,123
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    Your "partner" appears not to be married to you so as Kinger said the rules around joint purchasers do not apply since he is not a purchaser. Thus you, as sole purchaser, fall below the standard rate SDLT so zero is payable.
  • Thanks all for the replies - thats really helpful.
This discussion has been closed.
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