Stamp Duty Question..

00ec25

therealbane wrote: »

X transfers 50% of BTL to Y.

Y receives a 50% share of ownership but gives nothing in return as there is no o/s mortgage

higher rate SDLT (or std rate for that matter) does not apply

X is married to Y at time of transfer so no CGT is triggered as it is an inter spouse gift. Note Y "acquires" the property at X's original cost when it does finally come to doing a CGT calculation when the property is eventually sold

therealbane wrote: »

Y transfers 50% of main residence to X.
Would X then be liable to pay SDLT on 50% of the remaining mortgage? At the higher rate? Does it make a difference that 50% of the remaining mortgage would fall under the 125k threshold?

X is liable for higher rate SDLT because the value of 50% of the o/s mortgage is more than the £40,000 threshold applied in higher rate cases (the 125k threshold applies only to std rate cases). This is clearly explained in the link at post #3 had you read it.

It does not matter if X owns less than 50% of the property, the default is that the mortgage liability is joint and several so is deemed to be 50%

therealbane wrote: »

Would/should this method work out cheaper in the long run than X & Y purchasing the 400K property together to begin with? - This would equate to a rough 22K SDLT fee I believe?

can't say

you have not explained if X currently owns a residential property as well as the rental? Will the residential one be sold and replaced with the new jointly owned property?

if there is a replacement then X would not be liable to higher rate on purchase of the 400k as it would be a replacement of the main residence

therealbane

X owns no other properties other than the BTL and that's never been main residence.

Y is a first time buyer.

Does Mortgage amount make a difference when a couple gets married and the property is split 50/50 - in terms of SDLT? What would happen if there was no mortgage?

00ec25

therealbane wrote: »

X owns no other properties other than the BTL and that's never been main residence.

Y is a first time buyer.

Does Mortgage amount make a difference when a couple gets married and the property is split 50/50 - in terms of SDLT? What would happen if there was no mortgage?

please read the links at #3 rather than asking questions which are clearly answered therein

therealbane

Sorry if i'm asking stupid questions.. But i've discussed this with a solicitor and they've confused me even more. The solicitor said that X would need to pay the full higher rate stamp duty when they receive 50%, even if no money changes hands, and no matter what the mortgage is...?

But from what I understand from reading here and on those links... X would pay stamp duty on only the 'Chargeable Consideration' amount, which is 50% of the mortgage amount.. Right? So that means the property value doesn't matter, just the mortgage amount?

So solicitor says 50% of property (400K) = £22k ish
From what I understood, 50% of outstanding mortgage (100K) = £3k ish

Thank you

00ec25

therealbane wrote: »

Sorry if i'm asking stupid questions.. But i've discussed this with a solicitor and they've confused me even more. The solicitor said that X would need to pay the full higher rate stamp duty when they receive 50%, even if no money changes hands, and no matter what the mortgage is...? rubbish. The chargeable consideration is the sum of the money that changes hands and/or plus half the o/s mortgage assuming it is a transction going from 1 owner to 2 owners

But from what I understand from reading here and on those links... X would pay stamp duty on only the 'Chargeable Consideration' amount, correctwhich is 50% of the mortgage amount.. Right?correct, if 1 > 2 owners So that means the property value doesn't matter, just the mortgage amount?correct

So solicitor says 50% of property (400K) = £22k ish
From what I understood, 50% of outstanding mortgage (100K) = £3k ishcorrect, the consideration exchanged is >40% so charged at 3% because it is between 40k and 125k @ the higher rate of 3% on the amount up to 125k

Thank you

OK, yes you are correct the chargeable consideration for X is the amount of outstanding mortgage, not the value of the property.

If your solicitor continues with that line then report them to the Law Society as being seriously and totally incompetent citing the link already given as that is so self explanatory it is incredible that a solicitor would make such a simple error.

https://www.lawsociety.org.uk/For-the-public/Using-a-Solicitor/Complaints/

are they "real" solicitors or merely licensed conveyancers?

therealbane

Thanks a lot for being so helpful and patient with me :beer:

Would there be any repercussions or consequences of X giving Y a large sum of money to purchase a property? With X moving in to the same property but not registered/paying on any bills?

00ec25

therealbane wrote: »

Would there be any repercussions or consequences of X giving Y a large sum of money to purchase a property? With X moving in to the same property but not registered/paying on any bills?

yes, it will be Y's property and as they are not married then she can kick X out and make off with the loot scot free.

if on the other hand X has been foolish enough to marry Y then we are back to discussing the fact that a married couple is one "unit" for SDLT purposes so there is no his or hers property. There is only "ours"

The subsequent divorce will then sort out who gets what

therealbane

There would be a contract/declaration of trust in place to safeguard X's money.

So at the point of marriage, the couple become one unit. If Y bought the property, then X & Y marry 3 years down the line, is it at that point that X pays the SDLT on their chargeable consideration amount?