Question on Stamp Duty on Transfer of Ownership

quasimodo321

Hi there,

My house is valued at £350k. I've got an equity of £100k and an outstanding mortgage of £250k. I transfer half share of the property to my wife and we make a joint application to re-mortgage our house by borrowing £250k at a mortgage fee of £2k, which is added to the mortgage.

Do we need to pay Stamp Duty for the transfer of title? In other words, would the consideration for SDLT purposes be £125k(in which case no SDLT would be due) or 126k (i.e. [250k + 2k]/2, in which case an SDLT of 1% would apply.)

Thanks in advance for your help.

martinsurrey

00ec25 wrote: »

total consideration exchanged is 126 so yes liable for SDLT

why can't you wait and pay off a bit of mortgage or pay the fee yourself, then the problem goes away?

No, I don’t think so.

The mortgage fee is not a payment to you, or for a service on your behalf, you are paying £1k for your mortgage application and your wife is paying £1k for her mortgage application, her £1k does NOT benefit you, so it is not chargeable consideration. (this is the same as in every other purchase, the mortgage fees is never included in SDLT calcs)

So the chargeable consideration is the half of the mortgage she assumes - £125k, so no stamp duty payable.

OP, you need to be very precise with your numbers, if the mortgage OS balance is £250,001, you’ll need to pay stamp duty.

Richard_Webster

Quote:
Originally Posted by 00ec25
total consideration exchanged is 126 so yes liable for SDLT

why can't you wait and pay off a bit of mortgage or pay the fee yourself, then the problem goes away?
No, I don’t think so.

The mortgage fee is not a payment to you, or for a service on your behalf, you are paying £1k for your mortgage application and your wife is paying £1k for her mortgage application, her £1k does NOT benefit you, so it is not chargeable consideration. (this is the same as in every other purchase, the mortgage fees is never included in SDLT calcs)

So the chargeable consideration is the half of the mortgage she assumes - £125k, so no stamp duty payable.

OP, you need to be very precise with your numbers, if the mortgage OS balance is £250,001, you’ll need to pay stamp duty.

I agree with this.

wannahouse

so if you take the mortgage out in one spouses name, and then want to remortgage and add the other spouse down the line, you will have to pay stamp duty again?
even though you already paid it when you purchased the house in the beginning?

rpc

You never really just add someone on - you transfer ownership from A to A+B. Whevener ownership transfers (with a few exceptions), stamp duty is due based on any consideration.

It is explained here http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm and shows how stamp duty can be payable even when no money changes hands.