Gifting part of buy to let mortgaged house to spouse

SDLT_Geek

roadweary said:

SDLT_Geek said:

roadweary said:

SDLT_Geek said:

roadweary said:

Hi,

I'm just about to re-mortgage adding my wife to the mortgage of a buy to let property.  We jointly own the house we live in.  To be transparent the idea was to reduce the tax burden as she is in the lower tax bracket.

I've had the house since around 2007.  Purchased for about £195,000 probably worth about £350,000 now.  Re-mortgage will be for roughly £90,000.

I've used an online calculators and thought there was no stamp duty to pay.  

But now I've realised I made a mistake (I thought it was asking if she every owned a share in the buy to let property, but it was asking if she had ever owned a share in any property) and I think there is stamp duty to pay....namely £2,562.

..............

My legal questionnaire has these options.  Which would I select to keep her name on the mortgage but not incur the stamp duty?

...............

I suggest you check the stamp duty position.  Is the property in England, so the relevant tax is stamp duty land tax?

How did you get to £2,562 as the stamp duty?  There is an SDLT rule that the extra 3% does not apply to transactions between spouses who are living together.  That might help in your case.

It's for a property that is let out, not the property we live in together.

roadweary said:

Through my mortgage advisor I've been told that there is stamp duty as we both already own a property.  The sum under consideration is the mortgage amount - 90k.  As we are sharing the mortgage, the consideration is half of that sum.....so it's 3% of 45k

The rule about the 3% surcharge not applying for a transfer between spouses is not limited to the property the spouses are living in.  It also applies to a let property.  So there should be no SDLT liability here.

I'd love to see where that is stated, because everything I have read states that because there is a mortgage, by being added to the mortgage there is that financial consideration.

Yes, there is "chargeable consideration" because of the mortgage debt, but as @propertyrental says, the rate of SDLT is important. 

The fact that the 3% surcharge does not apply to a transfer between spouses who are living together, is confirmed in the lower part of the here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09820. 

A land transaction return will be needed, but because standard rates would apply, there is no SDLT to pay.

roadweary

I don't know what to say.  I'd love it to be true but the guides I show contradict that.....and the example you show doesn't apply to me.

Legal advice so far says 50% of the mortgage will attract Stamp Duty.

I can't see where in the link you sent, it demonstrates or overrides the need to pay Stamp Duty - believe, me, I don't want to....but I don't see it.

propertyrental

roadweary said:

I can't see where in the link you sent, it demonstrates or overrides the need to pay Stamp Duty - believe, me, I don't want to....but I don't see it.

For transfers on and after 22 November 2017, the higher rates will not apply as a transfer between spouses is disregarded as above.”

From SDLT_Geek's link (and my own link earlier)

kingstreet

roadweary said:

Thanks.  How does the 99% ownership part happen?  Do I just have the conveyancing solicitor do the change to joint (I assume the option selected in the screen shot from my original post and then do something myself after with the land registry....or does the solicitor have to do the whole thing?

Have a look here - https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9826

Form 17 election.

SDLT_Geek

roadweary said:

I don't know what to say.  I'd love it to be true but the guides I show contradict that.....and the example you show doesn't apply to me.

Legal advice so far says 50% of the mortgage will attract Stamp Duty.

I can't see where in the link you sent, it demonstrates or overrides the need to pay Stamp Duty - believe, me, I don't want to....but I don't see it.

SDLT is only due if the "chargeable consideration" is above the relevant threshold.  You have worked out the chargeable consideration as £45,000.  

If the higher rates apply, then the threshold is £40,000 and so SDLT would be due.
But the higher rates do not apply, so the threshold is £250,000 and there is no SDLT to pay (though a return is needed).

roadweary

SDLT_Geek said:

roadweary said:

I don't know what to say.  I'd love it to be true but the guides I show contradict that.....and the example you show doesn't apply to me.

Legal advice so far says 50% of the mortgage will attract Stamp Duty.

I can't see where in the link you sent, it demonstrates or overrides the need to pay Stamp Duty - believe, me, I don't want to....but I don't see it.

SDLT is only due if the "chargeable consideration" is above the relevant threshold.  You have worked out the chargeable consideration as £45,000.  

If the higher rates apply, then the threshold is £40,000 and so SDLT would be due.
But the higher rates do not apply, so the threshold is £250,000 and there is no SDLT to pay (though a return is needed).

What kind of return?  The online calculator suggests stamp duty is due.  Ultimately I have a mortgage offer in both our names, a conveyancing companing assigned, and I should have a reference I can use to call the solicitors doing the work tomorrow.  I would expect as experts that I could trust them to give the right number.  I will direct them to the link you sent me....but I am concerned as I can't see that it clearly defines my situation.  And I'm not sure what to do if they say that the higher rate does apply.  Even worse if they way if applies and the chargeable consideration is £90k.  The only stuff that appears to read clearly, is where it describes me having to pay in my situation 

It's a pity no legal professionals have weighed in on the conversation.

CSI_Yorkshire

roadweary said:

SDLT_Geek said:

roadweary said:

I don't know what to say.  I'd love it to be true but the guides I show contradict that.....and the example you show doesn't apply to me.

Legal advice so far says 50% of the mortgage will attract Stamp Duty.

I can't see where in the link you sent, it demonstrates or overrides the need to pay Stamp Duty - believe, me, I don't want to....but I don't see it.

SDLT is only due if the "chargeable consideration" is above the relevant threshold.  You have worked out the chargeable consideration as £45,000.  

If the higher rates apply, then the threshold is £40,000 and so SDLT would be due.
But the higher rates do not apply, so the threshold is £250,000 and there is no SDLT to pay (though a return is needed).

What kind of return?  The online calculator suggests stamp duty is due.  Ultimately I have a mortgage offer in both our names, a conveyancing companing assigned, and I should have a reference I can use to call the solicitors doing the work tomorrow.  I would expect as experts that I could trust them to give the right number.  I will direct them to the link you sent me....but I am concerned as I can't see that it clearly defines my situation.  And I'm not sure what to do if they say that the higher rate does apply.  Even worse if they way if applies and the chargeable consideration is £90k.  The only stuff that appears to read clearly, is where it describes me having to pay in my situation 

It's a pity no legal professionals have weighed in on the conversation.

Legal professionals wouldn't provide legal advice on a public forum.  What you get is well-informed and long-standing members like SDLT_Geek.

By return I would expect they mean https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns

I read it the same way as they do (and opposite to you).  The relevant paragraph in the guidance is "From 22 November 2017, the higher rates rules disregard transactions solely involving the transfer of interests between spouses or civil partners while they are treated as living together on the date of purchase." in my view.  I don't think this means only transfer of interest in the property that they live in, I think it means transfer of interest in any property.

So to summarise - chargeable consideration is half of the £90k mortgage, or £45k.  This is the bit that attracts SDLT, but at what rate.  As the italic paragraph above states, it is a transfer between spouses living together, so we do not use the higher rates and we must use the normal rates.  The normal rate of SDLT for a chargeable consideration of £45k is 0% - so the total payable is £0.

roadweary

And the date of purchase applies to the date of re-mortgage....not the date I originally purchased (roughly 2007?)

Would the mortgage company be counted as someone else having an interest in the property?

"If (before or after the transaction takes place) someone other than the spouses or civil partners has an interest in the property, the transaction will still count as a higher rates transaction."

propertyrental

roadweary said:

And the date of purchase applies to the date of re-mortgage....not the date I originally purchased (roughly 2007?)

Would the mortgage company be counted as someone else having an interest in the property?

"If (before or after the transaction takes place) someone other than the spouses or civil partners has an interest in the property, the transaction will still count as a higher rates transaction."

Yes - date of re-mortgage, or more specifically date spouse became joint owner(purchaae).

No - mortgage company has a charge over the property, not 'an interest'. At least not unless/until they repossess it from you ie for mortgage arrears.

CSI_Yorkshire

roadweary said:

And the date of purchase applies to the date of re-mortgage....not the date I originally purchased (roughly 2007?)

Would the mortgage company be counted as someone else having an interest in the property?

"If (before or after the transaction takes place) someone other than the spouses or civil partners has an interest in the property, the transaction will still count as a higher rates transaction."

The mortgage company has a charge on the property, but not an interest in the property, at least that's how I think it stands.

Date, I'm not sure about, but I'd guess it would be the date of transaction.