Is stamp duty payable on purchase price or house value?

pinknsparkly

Hi,

As per the title of the thread, is stamp duty payable according to the purchase price of a property or the value of the property?

My husband and I are intending to buy the property we currently rent from our parents for the price they purchased it at two years ago. According to estimates on zoopla, the house is now "worth" about 10% more than they paid for it.

Will we pay stamp duty on the purchase price or the valuation?

Also, just out of interest, taking an extreme example: if I won a house in a raffle that had cost me £1 to enter, or a friend/family member sold their house to me for £1 (assuming it was all done legally) - how would stamp duty work in this case?

Cheers guys

G_M

The value you pay SDLT on (the ‘consideration’)

The total value you pay SDLT on (sometimes called the ‘consideration’) is usually the price you pay for the property or land.
Sometimes it might include another type of payment like:

• goods
• works or services
• release from a debt
• transfer of a debt, including the value of any outstanding mortgage

Find out how to work out the consideration if your situation is complicated.

https://www.gov.uk/stamp-duty-land-tax/overview

kingstreet

SDLT is based on the 'consideration' the actual amount being paid and changing hands, not the market value.

However, CGT is based on the market value, so if this was a second property, the liability will be based on that, if any.

G_M

Good point. For the avoidance of doubt, the CGT liability, if any, would be your parents', not yours, since it is not their main residence that they are selling.

pinknsparkly

G_M wrote: »

https://www.gov.uk/stamp-duty-land-tax/overview

kingstreet wrote: »

SDLT is based on the 'consideration' the actual amount being paid and changing hands, not the market value.

However, CGT is based on the market value, so if this was a second property, the liability will be based on that, if any.

Thanks both for your speedy answers! I'd found the information about it "usually" being based on the purchase price but couldn't find out in which circumstances it wouldn't be based on the purchase price. Your link explains it nicely G_M

AdrianC

pinknsparkly wrote: »

According to estimates on zoopla, the house is now "worth" about 10% more than they paid for it.

Zoopla estimates are a waste of electrons.

You and your parents are definitely "connected parties", so there's a whole range of traps you could fall into. Part of the under-declared value could count as a gift. Your solicitor can give you a much better idea.