Stamp Duty, please help - dazed and confused..

Frank_Spencer_2

Our house has a mortgage with both title deeds and mortgage being in my wife’s name only.
We would like to remortgage the house in both our names with different lender. Title deeds will obviously need to be changed to include my name. The outstanding mortgage is around £300000 and we will remortgage the house(with different lender) to £350000. What is the amount of stamp duty we will have to pay?
We’ve been advised that we’ll have to pay stamp duty on half of the amount of remortgage which is £350000 / 2 = £175000 so stamp duty = £1750.
On the other hand, I think I read somewhere that the law might view this differently - my wife and I will in effect be buying a house from my wife and therefore the full stamp duty will be payable. Very confusing!

Our solicitors are useless and it’s been 2-3 weeks since we’ve asked this question and haven’t received any answers from them. Our emails get ignored for few days at the time and the only answer we get is that someone will look into it for us L

Could you please advise what is correct, we need to act fast, very desperate for an answer...

Many thanks - very grateful for your time and effort!

milliejo

Basically I think you should look at the value of the property rather than amount of the mortgage as your wife is giving you a half share so stamp duty should probably be calculated on half the value

Cannon_Fodder

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm

I think 'Example 2' of the 'Getting Married' section matches the situation you describe ?

Frank_Spencer_2

Hi,

I've seen example no.2 already but it says there: "SDLT is charged on the amount paid for a property or the amount of 'consideration' given", so I am not sure I understand which one is applicable to us since it doesn't say "either or" , it just says "or" ?

What's your guess?

Thanks very much, any input greatly appreciated!

Frank_Spencer_2

milliejo wrote: »

Basically I think you should look at the value of the property rather than amount of the mortgage as your wife is giving you a half share so stamp duty should probably be calculated on half the value

This is a good point and it is the part of my uncertainty, it makes sense but at the same time on hmrc website about stamp duty it says that it could be either way :huh::question:

life wouldn't be that apealing without occasional headaches

00ec25

you almost had it...

if you follow through on the HMRC link you will see that consideration is defined as anything which has a monetary or non monetary value, furthermore, in the specfic case where the only "consideration" being given is a share of the mortgage debt, the value of the house is irrelevant since that is not the basis of the consideration being transferred
The value of the mortgage debt equals the amount of the consideration, so in your case the advice you have been given is correct

SDLT will be based on the consideration you are giving to your wife, ie 50% of the new mortgage @ 1% of £175k

Frank_Spencer_2

Thanks very much!

I got very concerned after I read somewhere on the net that all this remortgaging would in effect create a completely new transaction ie.
my wife and I would be buying a house from her therefore the full stamp duty would be applicable.

What are your thoughts on that?

many thanks

cheers

Richard_Webster

SDLT is charged not only on money paid over but also on the assumption of a debt from someone else. So if you notionally take on half the debt that is £175000 and so £1750 SDLT is payable. Scarcely worth doing unless the mortgage deal is really amazing.

Frank_Spencer_2

Thanks Richard,

what are your thoughts on what I posted just before your reply, ie. is it in your opinion incorrect or does it make any sense that we would have to pay the stamp duty on a full value of transaction?

much obliged in advance

pawpurrs

I dont understand why any stamp duty should be payable? The house is allready owned and isnt being sold? Just an ammendament to the deeds due to marriage?

Richard_Webster

my wife and I would be buying a house from her therefore the full stamp duty would be applicable.

On what - the market value?

No, this is wrong

You are not actually paying anything for your share in the house are you?

Therefore SDLT only chargeable on the assumption of debt.

If your wife chooses to give you half of the equity that is a matter for her and there is no SDLT on a real gift.

(There could be a separate later issue about a potential undervalue transfer being capable of being set aside if your wife ever became bankrupt and the need for insurance to cover this but hat is an entirely different story and nothing to do with SDLT.)