Stamp duty, remortgage second property

dddppp

Please help!
When my wife and I first met we had a house each, we moved in together and rented out her house. We sold my house and bought a property together 5/6 years ago (joint mortgage/both names on deeds).

We have finally got round to remortgaging/changing lender on my wife's house. It has always been in her name only (mortgage and deeds). We are changing to a buy to let and both names will be used on the new mortgage and a transfer of equity will take place to get both our names on the deeds.

I realised today that stamp duty may be applicable, but I cannot find a definitive answer as to how much?

Here are the figures:
House value £80,000
Mortgage amount £57,000
I am not paying her any money for the share of equity (which I assume will be 50%)

I have read that the stamp duty would possibly be 3%, but is this 3% of:
1. The £80,000 valuation
2. 50% of the valuation (£40,000)
3. The mortgage amount (£57,000)
4. 50% of the mortgage amount (£28,500)

Would I be exempt if it is the 4th outcome from above as it is less than £40,000?

Thank you for your time.

heston2014

As I understand if you already own a property and purchasing a second home and depending on the price of the new property, additional stamp duty applies. To work out the actual amount, google sldt calculator or go to the HMRC website and you'll also find it there.

00ec25

"transfer" between spouses where no actual cash changes hands is done on the basis of respective share of any o/s mortgage

so option 4 applies in respect of the higher rate SDLT - your share is <40k so not subject to higher rate because condition A is not met https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09770

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09765

on that basis the standard rate SDLT applies. Your share of o/s mortgage is 28,500 = way below the std rate threshold of 125k
see example 2 https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

SUMMARY
no SDLT is payable at all

NOTE RE CGT
it is a let property. Your wife was sole owner therefore the transfer to you is made at her original purchase price when she bought it x 50% since you have acquired that share.
NOTE EVEN MORE CAEFULLY
if wife ever lived in the property BEFORE she married you and lived as her (then) main/only home she will have a claim to partial CGT relief.
You DO NOT "inherit" such a claim.
Sop, when the property is finally sold your respective CGT liabilities could be radically different as she may have some relief that you will not.
That does of course assume you remain joint owners at point of sale. If "you" decide at a future date to put it back into her sole name so as to improve the CGT position do so well before the sale otherwise HMRC will disallow it and tax you each.

Also consider this: for the value involved her CGT tax relief may actually be worth les than your CGT allowance at which point selling as joint owners may actually be more tax efficient. Obviously that does however depend on future tax rates and allowances (the current allowance being £12,500 per owner so you can see how marginal the position is )

SDLT_Geek

I agree Option 4. Also note the rule (from 22 November 2017) that a transfer between spouses who live together is not subject to the higher rates of SDLT.

dddppp

Thank you all for taking the time in replying.