Stamp Duty

adesell

I own a property currently on a Buy to Let Mortgage. I am sole named person on the deeds of this property. The property is a second home where my Mother and Brother reside.

To obtain a more cost effective Residential Mortgage, it has been suggested by a mortgage advisor that placing my wife on the mortgage deeds as a second person would improve mortgage affordability. My wife's income can then be included in the mortgage affordability calculation.

 My question to yourselves is, would adding my wife to the property deeds incur a Stamp Duty payment and if so how much? The property is currently valued at £290k

I sent this question to the HMRC but they just responded stating they were not answering questions via email.

Mr.Generous

Harsh but thiis is the rule ...

So if half the mortgage value is above stamp duty threshold (which is nil for a second property) they SD has to be paid.

Don't you just love tax?

An example of when Stamp Duty Land Tax is payable if you’re given property as a gift

The owner of a property decides to transfer half of their share to their spouse. The owner does not take a cash payment for this share, but there’s an outstanding mortgage on the property.

Their spouse takes on the responsibility of 50% of the outstanding mortgage. If the amount outstanding that their spouse takes on is more than the current threshold, Stamp Duty Land Tax is payable.

HMRC must be told about the transaction by filling in a Stamp Duty Land Tax return.

noitsnotme

Can you get a residential mortgage if it’s rented out, even to family?

adesell

noitsnotme said:

Can you get a residential mortgage if it’s rented out, even to family?

Apparently?? But the previous comment has answered my question anyway and given me what I couldn’t find on HMRC website 👍

SDLT_Geek

adesell said:

I own a property currently on a Buy to Let Mortgage. I am sole named person on the deeds of this property. The property is a second home where my Mother and Brother reside.

To obtain a more cost effective Residential Mortgage, it has been suggested by a mortgage advisor that placing my wife on the mortgage deeds as a second person would improve mortgage affordability. My wife's income can then be included in the mortgage affordability calculation.

 My question to yourselves is, would adding my wife to the property deeds incur a Stamp Duty payment and if so how much? The property is currently valued at £290k

I sent this question to the HMRC but they just responded stating they were not answering questions via email.

Is the property in England, so the relevant tax is SDLT?  I expect that is the case, as you mention having asked HMRC.

The "chargeable consideration" is likely to be a proportion of the mortgage debt.  For example, if your wife is to take a 50% share and the mortgage debt is £270,000, then the chargeable consideration would be £135,000.

At that level, there would be no SDLT if "standard rates" apply, but the SDLT would be at 3% if the "higher rates for additional properties" apply. 

The good news is that the higher rates do not apply to transfers between spouses (unless they are separated).  So I would expect there to be no SDLT due here, but a return will be needed if the chargeable consideration is £40,000 or more.

propertyrental

SDLT issue answered above.

But I don't see how this achieves your aim of "To obtain a more cost effective Residential Mortgage,..."

The property will still be "where my Mother and Brother reside." and your main residence will remain wherever you currently live???????

propertyrental

noitsnotme said:

Can you get a residential mortgage if it’s rented out, even to family?

Usually not.

OP would have to read the terms of his BTL mortgage. He may or may not have informed his lender who his tenants are......

housebuyer143

propertyrental said:

SDLT issue answered above.

But I don't see how this achieves your aim of "To obtain a more cost effective Residential Mortgage,..."

The property will still be "where my Mother and Brother reside." and your main residence will remain wherever you currently live???????

I think the plan is to get more borrowing on the residential house they live in maybe.

sheramber

Perhaps the OP could confirm.

What house is he trying to remortgage - A  the  residential property or B the second house his mother and brother live in?

adesell

A mortgage advisor suggested I could obtain a Residential mortgage on a second property. Being residential it would matter not that family members live there as a residential mortgage would not rely on rent income as an affordability. The benefit of a residential mortgage is that it would be a lesser percentage rate than a BTL. My initial question about being charged Stamp Duty has ben answered. I would indeed be charged stamp duty by adding my wife to the deeds. I initially attempted to ask HMRC but the relevant phone line stated they were taking no more calls due to demand and it was the same reply with the email address hence my question on here. Thank you for your replies.

SDLT_Geek

adesell said:

A mortgage advisor suggested I could obtain a Residential mortgage on a second property. Being residential it would matter not that family members live there as a residential mortgage would not rely on rent income as an affordability. The benefit of a residential mortgage is that it would be a lesser percentage rate than a BTL. My initial question about being charged Stamp Duty has ben answered. I would indeed be charged stamp duty by adding my wife to the deeds. I initially attempted to ask HMRC but the relevant phone line stated they were taking no more calls due to demand and it was the same reply with the email address hence my question on here. Thank you for your replies.

Why do you say the bit in bold above about stamp duty???