Stamp Duty House Swap

Trict

Hello all, we are looking to swap houses with my parents.  The values are the same both £400k and no money will be transferred between parties involved.  Am I correct in thinking that this will still be regarded as a sale and therefore Stamp Duty applied?  If that is the case, then we couldn't afford to swap, and we will stay put.  Many thanks in advance. 

user1977

Yes, the consideration for stamp duty purposes is the value of the property you're giving them (and vice versa).

Trict

Darn!! Thats put a spanner in the works.  My parents thought there would be nothing to pay. Thanks for the quick reply.

pinkshoes

So how does it work when people separate or get a new partner and have someone taken off or put on the deeds? They don't pay stamp duty??

So could the OPs partner move in with the parents, get put on the deeds, then one of the parents move in with the OP and get put on the deeds, then the OP moves in with partner and remaining parent etc... sounds a bit like that chicken, corn and fox scenario 

user1977

pinkshoes said:

So how does it work when people separate or get a new partner and have someone taken off or put on the deeds? They don't pay stamp duty??

Yes they do, on any consideration. If you pay your partner £x for the half of the house you're acquiring, that's chargeable (though typically will be under the relevant limits). If they gift it to you, there's no stamp duty payable.

pinkshoes said:

So could the OPs partner move in with the parents, get put on the deeds, then one of the parents move in with the OP and get put on the deeds, then the OP moves in with partner and remaining parent etc

No, because they're still swapping their interests in the houses. You can't kid on they're completely unconnected "gifts" - in the same way that you can't avoid Income Tax by pretending that you are voluntarily "working" and your employer just happens to make you a "gift" at the end of each month...

housebuyer143

user1977 said:

pinkshoes said:

So how does it work when people separate or get a new partner and have someone taken off or put on the deeds? They don't pay stamp duty??

Yes they do, on any consideration. If you pay your partner £x for the half of the house you're acquiring, that's chargeable (though typically will be under the relevant limits). If they gift it to you, there's no stamp duty payable.

pinkshoes said:

So could the OPs partner move in with the parents, get put on the deeds, then one of the parents move in with the OP and get put on the deeds, then the OP moves in with partner and remaining parent etc

No, because they're still swapping their interests in the houses. You can't kid on they're completely unconnected "gifts" - in the same way that you can't avoid Income Tax by pretending that you are voluntarily "working" and your employer just happens to make you a "gift" at the end of each month...

Are you sure? Surely full stamp duty was paid on the house at the full value by the owners when they bought it. Then they split and one is bought out and has 100%. Effectively they would be paying stamp duty twice for the same house? 

Not saying there is anyway around it in OPs case, just not sure if that makes sense when you take an owner off the title. 

SDLT_Geek

Trict said:

Hello all, we are looking to swap houses with my parents.  The values are the same both £400k and no money will be transferred between parties involved.  Am I correct in thinking that this will still be regarded as a sale and therefore Stamp Duty applied?  If that is the case, then we couldn't afford to swap, and we will stay put.  Many thanks in advance. 

Assuming the properties are both in England, then a "market value" rule applies.  Each party pays Stamp Duty Land Tax based on the market value of the property they acquire.

Trict

Getting even more confused now, lloked it up on HMRC site and it states under "exemptions to SDLT"

"no money or other payment changes hands for "a land or property transfer",  as far as I read it that means we would be exempt?

This is driving me nuts!  One minute i think we have to pay then i think we're exempt. 

SDLT_Geek

Trict said:

Getting even more confused now, lloked it up on HMRC site and it states under "exemptions to SDLT"

"no money or other payment changes hands for "a land or property transfer",  as far as I read it that means we would be exempt?

This is driving me nuts!  One minute i think we have to pay then i think we're exempt. 

No, an exchange of houses is not exempt from SDLT.  Exchanges are dealt with by HMRC here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04020

DullGreyGuy

Trict said:

Getting even more confused now, lloked it up on HMRC site and it states under "exemptions to SDLT"

"no money or other payment changes hands for "a land or property transfer",  as far as I read it that means we would be exempt?

This is driving me nuts!  One minute i think we have to pay then i think we're exempt. 

But there is a payment, the other house... you are paying them your house for their house and visa versa... the exception is for gifts where its unconditional of any other form of exchange be that money, services, other property etc

Trict

Ah I see, so if they gifted it to me then i wouldn't have to pay. Don't think they'll be doing that.