Transfer of equity, chargeable consideration and stamp duty

daniel100jm

I hoping I can get some help with my stamp duty query on a chargeable consideration.
My partner is moving into my house and I am looking to transfer equity in the property to her. I have a mortgage for £125k (property value £270k) and we will be taking a second mortgage of £75k (for renovations), total outstanding mortgage to be £200k. This will be my partners second home as she already owns a flat (120k) and so will be liable to higher rate stamp duty.
My understanding is that my partners chargeable consideration that stamp duty is due on is £100k (see below)
Value - £270k
Outstanding mortgage - £125k
Equity - £145k
Additional borrowing - £75k
Total outstanding mortgage plus additional borrowing - £200k (divided by 2 = £100k chargeable consideration)
Stamp duty due is 3% of £100k = £3k
Thank you in advance for any assistance.

Tom99

Is she injecting any cash as well? If not 3% stamp duty on the £100k part of the mortgage she is supporting sound right.
What will the flat be worth after the £75k renovation?
If you do not want to own the flat 50%/50% (ie you make a gift of 50% of your current £145k equity the you really need a deed of trust which would say something like this assuming the flat is then worth £270k+£75k=£345k:

[FONT=Verdana, sans-serif]On the sale of the property and after paying the sale costs and redeeming the mortgage the proceeds of sale shall be split as follows:[/FONT]
[FONT=Verdana, sans-serif]Party A – 42% of the gross sale price less costs of sale[/FONT]
[FONT=Verdana, sans-serif]The remainder – Split 50%/50% between Party A and B[/FONT]

[FONT=Verdana, sans-serif]The above formula is dynamic and the exact %age of the net proceeds each party gets will vary over time as the house increases in value and the mortgage is paid off.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Eventually when the mortgage is paid off the house will be owned:[/FONT]
[FONT=Verdana, sans-serif]Party A – (145/300 + 200/345*0.5) = 71%[/FONT]
[FONT=Verdana, sans-serif]Part[/FONT][FONT=Verdana, sans-serif]y B[/FONT][FONT=Verdana, sans-serif] – (0/345 + 200/345*0.5) = 29%[/FONT]

G_M

daniel100jm wrote: »

.... I am looking to transfer equity in the property to her.
50%?More?Less? As 'Joint Tenants'or 'Tenants in Common'?

I have a mortgage for £125k (property value £270k)
Has your lender agreed to add her to your current mortgage?If not you may need to pay this off and re-apply in joint names(from current or a new lender).

and we will be taking a second mortgage of £75k (for renovations), total outstanding mortgage to be £200k.
So assuming answer above is 50/50, AND there is no aditional contribution, then yes, consideration = £100K

This will be my partners second home as she already owns a flat (120k) and so will be liable to higher rate stamp duty.
My understanding is that my partners chargeable consideration that stamp duty is due on is £100k (see below) yes
Value - £270k assume you've checked, but not relevant for SDLT
Outstanding mortgage - £125k
Equity - £145k
Additional borrowing - £75k
Total outstanding mortgage plus additional borrowing - £200k OK
(divided by 2 = £100k chargeable consideration)
Stamp duty due is 3% of £100k = £3k
Thank you in advance for any assistance.

https://www.stampdutycalculator.org.uk/stamp-duty-second-homes.htm

daniel100jm

Morning,

G_M & Tom99 thank you for your replies to my post its goof to know I'm thinking along the right lines.

Regards