Stamp duty for transfer of equity

dbillington

Hi,

My girlfriend currently owns a house with her sister. We are going through to process of buying her sister out, with ownership of the house moving to my girlfriend and I.

There is £170,000 left on the mortgage and we'll be paying her sister £80,000 in equity, resulting in a mortgage of £250,000. This will be our only property.

Our solicitor is saying that our stamp duty will be £2,342, but I don't understand the process well enough to know if this is correct. My questions are:

- Given the numbers above, where has the solicitor got this figure from?

- Is stamp duty only payable on the consideration for my half of the £250,000?

- I haven't purchased a property before, but I'm guessing I can't count as a first time buyer as I'm only a joint owner in the property?

Any help or advice you could give me would be much appreciated.

Thanks so much for your time!

Dom

AdrianC

The one figure you don't give is the most relevant - what's the value of the complete property? If you're paying £80k for half the equity, with an outstanding mortgage of £170k, then I'm presuming the full value is 170 + (2 x 80) = £330k.

Taking that, then...
SDLT on that, in full, would be £1,500 as an FTB - which you aren't, because your girlfriend already owns a property.
SDLT on that, in full, would be £6,500 ignoring the FTB incentives.
SDLT on half that, since your girlfriend's half isn't changing ownership, would be £0 as an FTB.
SDLT on half that would be £1,000 without the FTB incentive - but your half-ownership would be as FTB.

You need to ask the solicitor to explain that, because it makes no sense to me.

getmore4less

What share are you buying because if you raise the full 80k for the buyout with increased mortgage you don't seem to be putting any cash into the deal.

dbillington

Hi,

Thanks for your replies. The value of the property is £327,000 and the mortgage is covering the £80,000 equity.

Thanks,

Dom

dbillington

00ec25 wrote: »

that does not make sense

327 - 80 = 247, you say the o/s mortgage is 170

the new mortgage (250k) is irrelevant since we will assume that you and GF are taking that out together from its beginning, so you do not need to "buy into" that as an o/s mortgage of your GF

Apologies, in total there is around £160k equity in the house. The 80k is the half that is being paid to her sister.

00ec25

dbillington wrote: »

Apologies, in total there is around £160k equity in the house. The 80k is the half that is being paid to her sister.

still does not make sense. SDLT is due on half of the existing outstanding mortgage plus any cash for the equity being purchased from sister as the chargeable consideration your GF is "giving" to her sister is 170/2 for the mortgage + 80k cash = 165k

read example 3 https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

the SDLT on 165k would be 0% on first 125k then 2% on the remaining 40k = £800

however, it all depends on how your solicitor is classing your involvement as an additional purchaser. Perhaps he has split it into 2 transactions:
a) GF buys out sister from existing mortgage and gives her 80k cash then SDLT on that would be £800
b) you are then introduced as a new purchaser paying ?