Transfer of ownership from Sole to Joint - Stamp Duty Implications

Siko

Hi folks,

A quick question regarding transfer of ownership. I am the sole owner of our house and am remortgaging with the YBS as I write (a phenomenally painful process, but that's another story!) and they have insisted that as I am married, my new mortgage has to be joint.

I am happy to do this but I have been told by the solicitors that I have to change the title deeds at the land registry to reflect the transfer of ownership. I've been quoted about £230+ Land Registry fees (£80 I think for scale 2) but I now believe we may need to pay stamp duty on my wife's new share, even though no money is changing hands.

The property is worth around £330k with an outstanding mortgage of £170k. I had a look on here and the Land Registry but am pretty confused whether we pay SDLT or not. Any help gratefully received.

Land_Registry

I would suggest that you look at the HMRC website for details of what is required re SDLT (or not) in any given situation.

Whilst we will make a number of checks when registering such a Transfer the issue of whether SDLT is payable and/or what evidence/certification is required is a matter for HMRC to advise on, so you would not find such information on our website.

The link I have added takes you to the starting page for considering such matters

nodiscount

Does this help?

Receiving land or property as a gift or from a will
Someone might be left land in a will or receive it as a gift, for example from their:
husband or wife
civil partner
parent or relation
Property left in a will
If the property is acquired under the terms of a will, there's no need to notify HMRC and no SDLT is payable. This applies even if the beneficiary takes on an outstanding mortgage on the property on the date the person died, provided that no other consideration is given.
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.
Example
A husband decides to transfer a half share in a property he owns to his wife. She doesn't make any cash payment for this share, but there is an outstanding mortgage on the property. The amount outstanding is more than the current threshold, so SDLT is payable. It's payable even if the husband retains the mortgage. They'll need to notify HMRC of the transaction.

nodiscount

Or this:

Q The house my wife and I live in is registered at the Land Registry in both our names. Could you advise me on the costs and tax implications of transferring my half of the house to my wife? CR

A If you do the transfer yourself, by filling in forms AP1, TR1 and ID1 from the Land Registry, the only cost involved will be its fee, which ranges from £50 to £920 depending on the value of the property. However, the fee will be cheaper for all transfers completed on or after 22 October 2012, when most Land Registry fees are being reduced by 10%.

If you don't go down the DIY route you will need to pay a solicitor or conveyancer to deal with the Land Registry on your behalf.

As far as tax goes, there's no capital gains tax (CGT) bill because transfers between husband and wife (and civil partners) are free of CGT provided you are living together (or the transfer occurs in the tax year in which you separate). However, when your wife comes to dispose of the property, its "value at acquisition" would be its value when you jointly acquired the property rather than the value when you transferred your share to your wife.

There is also no stamp duty land tax (SDLT) bill provided the transfer is an outright gift. If by transferring your share of the property to your wife she takes on your share of the mortgage, or pays you cash for your share, there may be an SDLT bill based on the amount of the "consideration" given, which would either be the amount of mortgage she takes on or the cash paid.

http://www.theguardian.com/money/2012/aug/22/property-transfer-tax-implications

loubel

Assuming your wife isn't paying for the share in the equity, the consideration for SDLT will be half of the existing mortgage, so £85,000. This is above the limit at which you will have to submit a tax return (£40K), but below the limit at which tax becomes payable (£125K).

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm

holly_hobby

SDLT NIL rate threshold is any sale or transfer for consideration ( ie - made in exchange for capital, assets, services or transfer of debt), upto a value of 125k.

In your case, the consideration (as noted) is actually the share of mge your spouse is taking on under the transfer of equity, and is assumed by HMRC to be 50% of the os debt - which means in your case the consideration is equal to 85k (ie 170/2), which is below 125k SDLT threshold, accordingly NIL SDLT to pay.

No cgt on transfer.

Hope that clears things up for you.

Holly x