Stamp duty on remortgage

James_moore_2 · 11 March 2017 at 8:18AM

Hi all,

I have 1 BTL property only in my name, I also have my main family house only in my name. I am remortgaging the family home and at the same time doing a transfer of equity so that it is in joint names with my wife. The outstanding mortgage is circa £280k.

My wife own no other property and never has done.

I have one solicitor telling me we just pay standard stamp duty which works out to be £300.

I have another solicitor telling me that even though the BTL is only in my name, the law treats a marriage as a single unit and therefore my wife does already own the BTL. In this case by adding her on to the main residence she is effectively 'buying' a second property and there subject to the higher rate of stamp duty - which is £4.5k.

Who is right!!??

Thanks in advance.

xylophone · 11 March 2017 at 1:16PM

The BTL is in your sole name and you are both the legal and beneficial owner.

I don't understand how your wife can be considered an owner of this property as she has no legal or beneficial interest.

da_rule · 11 March 2017 at 3:35PM

Is she paying for the share? Any stamp duty is calculated on the value of the transfer. Therefore if she is paying less than £40k there is no stamp duty.

James_moore_2 · 11 March 2017 at 4:23PM

By adding her on to the mortgage she is taking liability for half the mortgage so is effectively "paying".

The question is whether or not stamp duty is payable at the higher rate? The BTL is solely in my name but as we are married the solicitor says we are a "single unit".

xylophone · 11 March 2017 at 4:39PM

I really don't understand how your wife can be considered to own a property in which she has no legal or beneficial interest.

Ring HMRC to query tax due.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/stamp-duty-land-tax

sheramber · 11 March 2017 at 6:10PM

Whether you understand it or not that is what the Government have ruled

https://www.stampdutycalculator.org.uk/stamp-duty-second-homes.htm

Property Ownership

Married couples & civil partnerships
For the purpose of property ownership, married couples and civil partnerships are seen as one unit. This means that if one person already owns a property, any subsequent residential purchase by either person will be seen as an additional property for both individuals.

James_moore_2 · 11 March 2017 at 6:31PM

I wonder if that counts when I already own the property, just adding my wife on to the mortgage. I get what you are saying but it just doesn't seem right to me.

kinger101 · 11 March 2017 at 6:32PM

I believe you won't have to pay the higher rate, as the text of the Finance Act 2016 is;

Spouses and civil partners purchasing alone

9(1)Sub-paragraph (2) applies in relation to a chargeable transaction if—

(a)the purchaser (or one of them) is married or in a civil partnership on the effective date,

(b)the purchaser and the purchaser’s spouse or civil partner are living together on that date, and

(c)the purchaser’s spouse or civil partner is not a purchaser in relation to the transaction.

(2)The transaction is to be treated as being a higher rates transaction for the purposes of paragraph 1 if it would have been a higher rates transaction had the purchaser’s spouse or civil partner been a purchaser.

(3)Persons who are married to, or are civil partners of, each other are treated as living together for the purposes of this paragraph if they are so treated for the purposes of the Income Tax Acts (see section 1011 of the Income Tax Act 2007).

So if you look at (2), technically the spouse would not have been subjected to the higher rate of SDLT as they are not purchasing an additional property. So ordinary rate SDLT will be levied based on the amount of debt transferred to the spouse.

I would however get HMRC's take on this, and that of an accountant if their opinion is unfavourable.

POPPYOSCAR · 11 March 2017 at 7:15PM

sheramber wrote: »

Whether you understand it or not that is what the Government have ruled

https://www.stampdutycalculator.org.uk/stamp-duty-second-homes.htm

Property Ownership

Married couples & civil partnerships
For the purpose of property ownership, married couples and civil partnerships are seen as one unit. This means that if one person already owns a property, any subsequent residential purchase by either person will be seen as an additional property for both individuals.

That has always been my understanding as well.

xylophone · 12 March 2017 at 1:03AM

It is obvious that currently the wife has no legal ownership of either property.

She is living in a house owned by her husband who also owns another property which he purchased prior to the marriage.

She is taking an equitable interest in the property she currently occupies with her husband who owns it.

How can this transaction be counted as the subsequent purchase of a second residential property when she didn't originally have any interest in either?

sheramber · 12 March 2017 at 3:07PM

(2) states that the transaction is to be considered higher rate if it would have been a higher rates transaction had the purchaser’s spouse or civil partner been a purchaser.

The wife is the purchaser therefore therefore if the OP was purchasing it , it would be a higher rate transaction, hence this is a higher rate transaction.

Stamp duty on remortgage

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