Stamp Duty when buying a share of a property

gw1

If I buy into a property currently owned by girlfriend, would I also have to pay stamp duty?

For example:

Property worth £240,000 currently owned (with mortgage) by my girlfriend.
I buy half the property so that we both own half it (preferably transferring my mortgage of £135,000 to that property and paying off hers as mine has a better interest rate - my mortgage becoming a joint mortgage).

Does this count as a sale of the whole property and therefore attract stamp duty at 1%, or a sale of half the property at £120,000 and therefore no stamp duty, or is stamp duty not relevant at all here?

Richard_Webster

If you are effectively replacing her mortgage with a joint one then half of her existing mortgage also has to be factored in.

So suppose she owes £120K on her mortgage then you are treated as taking over half of it = £60K. If you are also paying her £120K then total consideration for SDLT would be £180,000. On those figures therefore SDLT is £1,800.

People often get caught for SDLT on transfers of equity because they don't realise half the mortgage debt has to be taken into account.

InMyDreams

Why would he pay her £120 on top of taking over half the mortgage?
Surely he would only need to pay her £60K on top of taking over half her mortgage.

So consideration would be £60K cash + £60 mortgage = £120K.

Or would that only work if he had the £60 cash up front? Or am I just confused? (Quite likely.)

DVardysShadow

InMyDreams wrote: »

Why would he pay her £120 on top of taking over half the mortgage?
Surely he would only need to pay her £60K on top of taking over half her mortgage.

So consideration would be £60K cash + £60 mortgage = £120K.

Or would that only work if he had the £60 cash up front? Or am I just confused? (Quite likely.)

You are spot on. In Richard's example, the incomer would be taking on 75% of the house - although possibly only ending up with 50% of the beneficial ownership - depending upon how it is done.

I would suggest that OP and GF get a Deed of Trust draw up which accurately represents the respective ownerships.

I would also suggest that OP posts here the following information

• Value of house
• Current Mortgage in GF's name
• Cash being paid
• New Mortgage in joint names

and we can sort out the percentages

gw1

Thank you for all your replies. It's more complicated than I realised.
The situation is also more complicated than I explained in the OP.

I currently own my own home (mortgaged)

My GF is going to buy a new home but at present I'm not in a position to move out of mine (for personal reasons not financial reasons). The aim eventually is that I will sell mine and move into GF's house, and at that point we'd like to jointly own the house she is about to buy.

We're considering the possibility of jointly buying the house she is about to buy, but until I sell mine I'd only be able to own a small proportion. In the future I'd give her money so that we'd own half the equity and the mortgage would become joint.
Another complication is that, ideally, we'd transfer my mortgage to that property as my interest rate is only 2.5%.

Some figures:

My current property
value: £240,000
mortgage outstanding: £135,000 in my name only

GF's property
Assumed purchase price: £220,000 ( but still in negotiation so could change, changing other numbers slightly)
Mortgage: £150,000
I pay £10,000 cash
GF pays £60,000 cash

When I sell my house I pay her enough to buy up to 50% of equity and mortgage becomes joint. Ideally my mortgage transferred to benefit from lower interest rate but not essential

DVardysShadow

gw1 wrote: »

Some figures:

My current property
value: £240,000
mortgage outstanding: £135,000 in my name only

GF's property
Assumed purchase price: £220,000 ( but still in negotiation so could change, changing other numbers slightly)
Mortgage: £150,000
I pay £10,000 cash
GF pays £60,000 cash

When I sell my house I pay her enough to buy up to 50% of equity and mortgage becomes joint. Ideally my mortgage transferred to benefit from lower interest rate but not essential

Make your choice between porting the mortgage and minimizing the Stamp Duty. If the mortgage porting is that valuable, it will cover Stamp Duty issues fairly quickly.

It seems to me that you could do this by yourself buying the new property and hence porting the mortgage, your gf buying yours. She will not be able to sell it for 6 months min, but your needs may cover that. Once your old place is sold, she could transfer her equity in under the transfer of equity process.

gw1

DVardysShadow wrote: »

Make your choice between porting the mortgage and minimizing the Stamp Duty. If the mortgage porting is that valuable, it will cover Stamp Duty issues fairly quickly.

It seems to me that you could do this by yourself buying the new property and hence porting the mortgage, your gf buying yours. She will not be able to sell it for 6 months min, but your needs may cover that. Once your old place is sold, she could transfer her equity in under the transfer of equity process.

Thank you again for your reply.
So what you are suggesting is that I sell my house to my GF - she'd then pay stamp duty on that purchase of about £2,400
I buy the new property, porting my current mortgage, again paying stamp duty of around £2,200.

When she sells my current house in the future, she could transfer in equity without having to pay stamp duty again?
Is there any advantage of jointly purchasing the new property now, even if it's not a 50/50 split?

DVardysShadow

gw1 wrote: »

T
Is there any advantage of jointly purchasing the new property now, even if it's not a 50/50 split?

Probably. I am not sure how SD works once a property is jointly owned - I think you can probably tinker with equity quite a bit.

Thinking on it, you are right SD would be due 2.5 times going my way but 1.5 times going your way. But it does get your mortgage ported

Some of it will depend on what lenders will wear. I am thinking that this is not so much a SD problem as a mortgages problem [and best reposted on the mortgages forum - mention that you have crossposted on both threads if you do that]. As I say, if the advantage is in porting your mortgage, just pay the SD, you cannot win them all, so focus on the biggest win.

gw1

One other thing that occurred to me. If my GF bought my current house but I continue to live here and I buy the new one but she lives there, doesn't that make her liable for capital gains tax when she sells my current house as it won't be her primary residence?

DVardysShadow

gw1 wrote: »

One other thing that occurred to me. If my GF bought my current house but I continue to live here and I buy the new one but she lives there, doesn't that make her liable for capital gains tax when she sells my current house as it won't be her primary residence?

Rip her off and make sure she sees no capital gains.

DVardysShadow

Continues as

https://forums.moneysavingexpert.com/discussion/4059257