Stamp duty on transferring ownership from tenants in common to sole ownership

super_ski

Need some advice on the following please:

The property is owned via tenants in common (A:90%, B:10%) - full value £600k.
A wishes to sell their share to B. In real cash terms the ownership is A:20% and B 80% - no idea why the land registry had the percentages as 90/10.
How do the stamp duty rules apply when B purchases A's share?
Is this based on cash value and how does the land registry percentage split affect the stamp duty on the transaction?

thanks

super_ski

Hi,
Ah! Perhaps it's only written on the trust deed. If this states the 90/10 split do we risk stamp duty if consideration is much lower than the £250K stamp duty threshold
Thanks

chewmylegoff

timmyt wrote: »

if money changing hands is more than £125k then stamp duty is payable by B.

stamp duty is not based on the cash consideration, but the value of the interest in the property being transferred. obviously this is normally the cash consideration, as transactions are normally carried out at open market value. sounds like this one might not be.

hence if you own 90% and you sell your 90% to the other person for £1, the value of the transaction for stamp duty purposes would be £540k so £21,600 tax payable.

OP: you're right - you need some advice, and given the potential to end up paying a very large wedge of tax i suggest you seek professional advice rather than internet forum advice. better than either paying stamp duty you don't need to pay, or being done for tax evasion.

the stamp duty threshold is £125k now (as of 1 Jan 2012).

Richard_Webster

No SDLT payable if the transfer is a gift - although this may have other implications in the future - e.g. CGT/IHT.

However, if the property has a mortgage on it, then SDLT is chargeable (subject to normal £125K threshold) on a proportion of the debt transferred to the transferee and in that case the Deed of Trust may be relevant to establish that proportion.

polo2000w

Is is possible to alter the tenants in common ratio on a mortgaged property (eg from 50/50 to 90/10) and not require to fill in a stamp duty form?

Both people would still be legal owners and responsible for the mortgage debt - does the mortgage proportion need to change? So effectively it would work as a pure gift?