Stamp duty if you swap houses?

marmitequeen

Hi, was chatting with a friend last night and realised you are the people to answer a question:

She and her parents want to swap houses - will they have to pay stamp duty?

Essentially, she and her family live in smallish house in quiet area and want bigger. Her parents live in her old family home in area with lots of kids. The swap would be perfect, and because of the different areas, the properties are approx the same value (bit of cosmetic would be nice for the parents' house as it's stuck in the 80s!).

What's the score with this? It'd be brilliant for all if they could just go to a solicitor and legally swap the deeds. My friend's mortgage is portable, the parents paid theirs off. I've no idea what the parents really think about the idea but my friend said it was their idea.

Any thoughts?
thanks

Gwhiz

My understanding is that it's still treated by the tax man as a sale and purchase and therefore subject to SD as normal.

marmitequeen

I had a horrible feeling that would be the case...

mundibananas

why don't you just live in each others houses? or if there are implicaitons on the mortgage - change your mortgage to a buy-to-rent and rent your houses out to each other for a nominal fee each month.
hope this helps

JimmyTheWig

I agree that it is no different to a sale and purchase. Would be shocked if stamp duty wasn't due.

puddy

she couldnt just swap a mortgage over anyway, she would need to apply for a new mortgage (which would be ported from the old property) for the new property

sunshinetours

[STRIKE]Hmm - I don't think you do actually if no money changes hands, so if it was a straight swap, I don't believe you pay over any SDLT[/STRIKE]

Many get confused with Capital Gains tax or IHT which could be payable if a property was transferred or swapped based on the market value/probate value

Edit:- Teach me not to read properly - as others have said you will pay on the deemed consideration which in this case would be the market value of the house you are swapping to. Sorry!

PasturesNew

Stamp Duty is about the value being transferred, not just the physical money. So, yes, stamp duty would be payable on both transactions. There is a little wriggle room over how much they're both worth, but stamp duty is unavoidable.

Evilm

sunshinetours wrote: »

Hmm - I don't think you do actually if no money changes hands, so if it was a straight swap, I don't believe you pay over any SDLT

Many get confused with Capital Gains tax or IHT which could be payable if a property was transferred or swapped based on the market value/probate value

Unfortunately incorrect.

You DO have to pay stamp duty if doing a house swap.

Cannon_Fodder

If there were no mortgages, it might have worked; http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm#4

"Property given as a gift"
"If the property is received as a gift there's no SDLT to pay, so long as there's no outstanding mortgage on it. But if the person who receives the gift takes over some or all of an existing mortgage, then SDLT may be payable if the value of the mortgage is over the SDLT threshold."

sunshinetours

Cannon_Fodder wrote: »

If there were no mortgages, it might have worked; http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm#4

"Property given as a gift"
"If the property is received as a gift there's no SDLT to pay, so long as there's no outstanding mortgage on it. But if the person who receives the gift takes over some or all of an existing mortgage, then SDLT may be payable if the value of the mortgage is over the SDLT threshold."

Yes I was thinking of gifts in my original reply but don't think in a house swap case , regardless of mortgage there can ever be an exemption.
Basically the people swapping their houses are receiving consideration in the form of the market value of the new house so SDLT always payable