Gifting propety and stamp duty

misterfrostie

Hello everyone. My first post on the forum but a very important topic to me so I hope someone can help.
My parents have lived for 40 years in a farmhouse that I grew up in (I'm 40, married with 2 kids)
My father is 72 now and is looking to progress his retirement from farming. He's proposing a straight swap of his farmhouse (estimated value £600k) for our 3 bed semi on the same street (estimated value £200k) so he and my mother can enjoy a house more their size and with all the modern conveniences that will make their later years easier.
I understand that if he lives for 7 years after gifting the house there will be no inheritence tax to pay, but regarding the required immediate transaction:
My dad has seen a solicitor to prepare the likely costs of his side of the move (I'll be paying both our and their legal costs)
His solicitors letter details stamp duty on our house at 1% - ie £2000. What I don't yet know is whether the exchange needs to be treated as a formal sale and therefore stamp duty must be paid. I'm really hoping not as if I need to pay stamp duty on his property it'll be £24k.
Can anyone offer any reliable advice on what my situation is here please ?
Thank you !
Steve

pjclar02

Hello there

I am by no means an SDLT expert, but my understanding is that property swaps such as this are indeed both liable to SDLT. The SDLT is calculated on the consideration provided in return for the acquisiton of a property. In your case, the consideration provided by each party for the acquisition of the other's property is your own property. Therefore SDLT is payable on the market value of each property.

xylophone

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm
http://www.hmrc.gov.uk/sdlt/reliefs-exemptions/no-sdlt-return.htm



http://www.hmrc.gov.uk/sdlt/calculate/reliefs-exemptions.htm

http://news.bbc.co.uk/1/hi/business/4259990.stm