taking over joint mortgage

alanC

My son and daughter as first time buyers, joint own a flat. It cost £417,000 five years ago and is now valued at aprox £575,000.

Currently son and daughter live in joint-owned flat.

My daughter has now taken out a second mortgage to help boyfriend buy small house. Daughter had to pay £6,000 in stamp duty (refundable, we understand if she moves from flat, transfers equity to son and new house becomes main residence)

Son is prepared to take over mortgage on flat and is financially able to do so. Daughter happy to gift her share of flat to son.

What are the tax implications?

Is son liable for stamp duty on equity transfer or capital gains... if so how is this worked out?

What are the time restrictions on daughter in order to be get refund of £6G stamp duty?

Tom99

[FONT=Verdana, sans-serif]I think stamp duty by brother will depend on the current mortgage outstanding on the property?[/FONT]
[FONT=Verdana, sans-serif]No CGT since they both live there.[/FONT]
[FONT=Verdana, sans-serif]Your daughter is giving her brother at least £79,000 plus her half of what has been paid off the mortgage over the past 5 years, can she afford to do that whilst trying to buy another property with boyfriend, that amount would make a useful deposit on the new house?[/FONT]

SDLT_Geek

If your son and daughter own the flat in equal shares then the chargeable consideration your son is treated for the purposes of stamp duty land tax as giving your daughter is one half of the outstanding mortgage.


For example if the outstanding mortgage is £360,000 then the chargeable consideration is £180,000. SDLT at normal residential rates on £180,000 is £1,100.


Your son is not entitled to first time buyers relief for SDLT, even though it might be a further interest in his first property. The 3% SDLT surcharge should not be due as he only has an interest in one property.