Stamp Duty calculations for adding spouse to BTL property

taxmatters

Hi,
I am purchasing a property and selling my existing one. There is not chain apart from my property sale and purchase. My mortgage and searches and all are sorted but the buyers mortgage is not getting through ever after waiting for 3 months. I have lost hopes that their mortgage will be approved, so I am going to retain the existing property and going with let to buy to release funds from existing property and use the released funds to buy the next one. Existing property is solely on my name with mortgage amount 150k property value 470k. 
My question is:
- If I take let to by mortgage (borrowing say £300,000 total) on my name and after 2 years get my wife added to the property ownership as joint owners (as my let to buy mortgage is 2 years fixed and I want to get my wife as joined owner for tax sharing purposes so that we can split the rental incoming to both of us), how will the Stamp duty calculated provided I plan to transfer 50% of property to my wife's name after 2 years on mortgage term finishing? Is this calculated as mortgage amount 300,000/2=150,000 so stamp duty on 150k?
- Is it possible to do the property transfer at the same time as applying the let to buy mortgage so that we can save the stamp duty as I own only one property at the moment?

SDLT_Geek

You will have to pay the extra 3% SDLT on your purchase, if the old home is kept.  This is because of the rules about "additional properties".

I would not expect any SDLT to be due on the £150,000 you calculate as the chargeable consideration for the acquisition by your wife of a half share in your old house.  This is because the 3% surcharge does not apply now to transfers between spouses who are still "living together".  That is the case even if the property is to be let out.  So long as you complete this by 31 March 2021, there would be no SDLT as the threshold is £500,000.

oldbikebloke

the answer to the question is SDLT liability on transfer to a spouse is based on the amount of outstanding mortgage (+ any cash she actually pays you for her share) at the date of transfer since that is the "chargeable consideration", so yes, in your case, 150k
https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

as you plan to do so in 2 years time, with a mortgage of 300k, as things stand at the moment the SDLT "holiday" will have ended by then and standard rules will apply. Transactions on/after 1 April 2021 will revert to the standard rate threshold £125,000, so any transfer in 2 years time would incur standard rate SDLT.
https://www.gov.uk/stamp-duty-land-tax

As explained by geek, you will not incur additional rate SDLT as the exception for married couples applies. It is therefore irrelevant whether you do or don't own more than one property at the point of transfer.


You’re given property as a gift
If you get property as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay SDLT if the value of the mortgage is over the SDLT threshold.
Example
A husband decides to transfer a half share in a property he owns to his wife. He doesn’t take a cash payment for this share, but there’s an outstanding mortgage on the property. The amount outstanding is more than the current threshold, so SDLT is payable, even if the husband keeps the mortgage. He must tell HMRC about the transaction.

AdrianC

Where does "let to buy" come from?

You are buying the property.
You are doing so in order to let it.
Buy to let.

That apart, do you actually want to run a residential lettings business? Do you have the first clue about your legal obligations? Will it even be profitable? Are you sure? After the +3% on the second purchase SDLT, after the financing costs, etc etc?

Also - it would make sense to keep your different queries into one thread...
https://forums.moneysavingexpert.com/discussion/6215277/deposit-for-let-to-buy-property

eddddy

AdrianC said:

Where does "let to buy" come from?

You are buying the property.
You are doing so in order to let it.
Buy to let.

This will be what the OP means by "Let to Buy" : 
https://www.gocompare.com/mortgages/let-to-buy/
https://www.which.co.uk/money/mortgages-and-property/home-movers/let-to-buy-explained-axb2g3h8hhx3

AdrianC

eddddy said:

AdrianC said:

Where does "let to buy" come from?

You are buying the property.
You are doing so in order to let it.
Buy to let.

This will be what the OP means by "Let to Buy" : 
https://www.gocompare.com/mortgages/let-to-buy/
https://www.which.co.uk/money/mortgages-and-property/home-movers/let-to-buy-explained-axb2g3h8hhx3

Semantic guff enabling "accidental landlords".

A mortgage for a let property is a BtL mortgage.

(and, yes, I know that in this instance it's not the property being let that the OP is buying)

taxmatters

As explained by geek, you will not incur additional rate SDLT as the exception for married couples applies. It is therefore irrelevant whether you do or don't own more than one property at the point of transfer.

First of all thanks all for the replies. These are really helpful.
So based on the above replies, is the following a correct summary?
Before 31 March 2021:

• If I transfer 50% of the BTL property share to my wife (having £300,000 pending mortgage, no cash payment involved), amount for chargeable consideration would be 300000/2=£150,000 but as this amount is less than current SDLT threshold (£500,000) we pay NO Stamp Duty. Understood.

After 31 march 2021 (likely to be the case in my situation):

• If I transfer 50% of the BTL property share to my wife (having £300,000 pending mortgage, no cash payment involved), amount for chargeable consideration would be 300000/2=£150,000 but as this time the "Stamp duty holiday" would be over by this time, so threshold becomes £125,000, I'll have to PAY Stamp Duty on £150,000, which is (3% on 125k + 5% on 25k) =  £5,000.
• So in this case I cann't avoid paying stamp duty (so above StampDuty is applicable) even though I am transferring share of my property to my wife as a gift?

Angela_D_3

I think you need proper advice,  I was told on here that I’d have to pay stamp duty adding my name to the matrimonial family home.  I don’t.  

oldbikebloke

taxmatters said:

• So in this case I cann't avoid paying stamp duty (so above StampDuty is applicable) even though I am transferring share of my property to my wife as a gift?

yes, shown in the example in my previous post from the link provided therein

oldbikebloke

Angela_D_3 said:

I think you need proper advice,  I was told on here that I’d have to pay stamp duty adding my name to the matrimonial family home.  I don’t.  

link please? All I see is posts about your divorce and battle with your ex

Angela_D_3

oldbikebloke said:

Angela_D_3 said:

I think you need proper advice,  I was told on here that I’d have to pay stamp duty adding my name to the matrimonial family home.  I don’t.  

link please? All I see is posts about your divorce and battle with your ex

Have a read through them it’s in there.  You’ll probably need a lie down afterwards