Transfer of equity and stamp duty, exemptions?

swindiff

My wife and I are currently going through the process of remortaging our property to secure a fixed rate when our current fixed rate deal ends in November.  We Purchased the property in 2013 and it is our only home.

Our property is currently mortgaged in my name only and we want to do a transfer of equity to remortgage in both our names.  This has brought up the issue of Stamp Duty with our conveyancer.  We believe we should be exempt, but the standard exemptions on their form do not apply to us.  

These are; Divorcing, Dissolving a Civil Partnership, Annuling a Marriage or Legally Separating.

To explain why we are in the position we are will require me to give you some background information.

My wife had a property which she owned with her ex-husband.  When they split up and he moved out he ran up debts on overdrafts which she was unaware of and this ultimately resulted in a charging order being placed on the property.  This clearly had a very negative impact on her credit rating.

We bought out her ex-husband with savings that I had and paid off the charging order,  we then remortgaged her property to release equity to buy our current property, which we are in the process now of remortgaging.  Because of her poor credit rating due to the charging order on the house we decided to apply for the new mortgage in my name only, this meant we could get a much better interest rate as my credit rating was very good. 

Although the mortgage was in my name only, it was a joint purchase funded by us both, we then later sold her property and also used some of the funds from that sale for home improvements in our new property, including a new kitchen.

As you can see, this was a joint purchase, and although we are now seeking to transfer equity to my wife there will be no purchase of this share and it is not a gift (these are the only 2 options on the form).  The property has always belonged to us both.

I am not sure the values would even make us liable to Stamp Duty, but I do not want to put something on a form that is incorrect, it is neither a gift or a purchase, it is simply a case of adding us both to the deeds now that her credit rating no longer is a barrier to competative mortgage deals.

From reading govenment guidance on stanp duty, what you pay depends on what the "chargeable consideration" is.  From what I gather this would be any cash that changed hands due to the transfer (that would be zero), plus 50% of the outstanding mortgage (we will be joint tenants 50/50) £96k/2 = £48k

£48k is clearly well below the £250k Stamp duty threshold, so I do not belive any stamp duty would be payable, but still, I feel a little uncomfortable putting someting on a form that is not correct.  I am not gifting the share to my wife, it has always been hers, we just mortgaged in my name at the time for what we considered to be sensible financial reasons.

Sorry for the long ramble but I wanted to make sure you understood the reasoning behind our decision.  The conveyancer has not been particularly helpful saying we should seek independent tax advice, so here I am on MSE Forum lol

MWT

swindiff said:

The property has always belonged to us both.

Except it hasn't, as you took steps to ensure it was documented as having you as the 100% owner...

swindiff said:

£48k is clearly well below the £250k Stamp duty threshold, so I do not belive any stamp duty would be payable, but still, I feel a little uncomfortable putting someting on a form that is not correct.  I am not gifting the share to my wife, it has always been hers, we just mortgaged in my name at the time for what we considered to be sensible financial reasons.

This is where the problem comes in, and I see why your conveyancer is suggesting you take independent tax advice, which you most certainly do not get by asking questions on here...

You are gifting the share to your wife, but you are also maintaining it is something she has already paid for so there was a consideration, just at an earlier date... ... can't really have it both ways...

swindiff

MWT said:

swindiff said:

The property has always belonged to us both.

Except it hasn't, as you took steps to ensure it was documented as having you as the 100% owner...

swindiff said:

£48k is clearly well below the £250k Stamp duty threshold, so I do not belive any stamp duty would be payable, but still, I feel a little uncomfortable putting someting on a form that is not correct.  I am not gifting the share to my wife, it has always been hers, we just mortgaged in my name at the time for what we considered to be sensible financial reasons.

This is where the problem comes in, and I see why your conveyancer is suggesting you take independent tax advice, which you most certainly do not get by asking questions on here...

You are gifting the share to your wife, but you are also maintaining it is something she has already paid for so there was a consideration, just at an earlier date... ... can't really have it both ways...

Does being 100% liable for the mortgage automatically make you 100% the owner of the property?  That was a bit tongue in cheek about tax advice hence the lol, but I know there are many knowledgeable people on here on all different areas of finance.  I guess the simplest thing for me to do is mark it on the form as being gifted, the "Chargeable Consideration" is then only £48k.  Even if it was a 100% mortgage, the propery is only worth £320k, so 50% of that would still get nowhere near the stamp duty threshold.

MWT

swindiff said:

Does being 100% liable for the mortgage automatically make you 100% the owner of the property?

No, it is what was recorded on the deeds at the Land Registry that matters...

If your wife was on the deeds with you both as either tenants in common or joint tenants then you wouldn't have a problem now...

... but with the way you did the first mortgage I would expect to find that only your name is on the deeds right now which is why this question has arisen...