Stamp Duty

Hatechutney

Hi. My Father and his sister own a holiday house that was left to them years ago and has no mortgage on it. They are tenants in common. My Father kindly wants to gift me his half and my Aunt has agreed to sell me her half at half the market value of the whole house (as she currently has ownership of half). 

My question is about the Stamp Duty. Stamp  isn’t payable of gifts so I thought I would be paying on the purchase half only. However the solicitor seems to be saying the Stamp Duty would be on the full value of the house despite half of it being a gift. Thank you for any advice.  

theartfullodger

Dunno but think HMRC tax (all taxes) on market value, not what parties assert was paid (I'm not suggesting in your circumstances but that could be an obvious tax-avoidance fiddle).

NB CGT must be declared and paid within 30 days (? 60?) of sale.  So get prepared early. Has anybody got legal costs from purchase and improvements costs (as opposed to repairs..) - usually claimable.  For CGT mortgage or not is irrelevant. 

Hatechutney

So sorry. I meant stamp duty. Not capital gains tax. Bit new to all this! 😳

Hoenir

CGT is payable. While the transaction is indeed a gift. The disposal for nil consideration remains a taxable event for your father.  An obvious loophole that was filled many moons ago. 

p00hsticks

Hoenir said:

CGT is payable. While the transaction is indeed a gift. The disposal for nil consideration remains a taxable event for your father.  An obvious loophole that was filled many moons ago. 

But any CGT will need to be paid by father and aunt.
The OP has since clarified that want they meant to query is their SDLT liability on the transaction. 

Keep_pedalling

Despite no money changing hands, your father will have CGT to pay on the gain in value of his share based on the current full market. Your aunt will have the same amount to pay. 

Depending on your father’s net worth it may be better for him to hold onto his share and pass it on after his death. That will avoid CGT but could impact the amount of IHT his estate may have to pay. Gifting it now could lead to a double whammy of having to pay CGT and IHT if he does not survive 7 years after making the gift.

user1977

SDLT is based on the consideration (i.e. any money or equivalent changing hands). There is no SDLT on gifts (or discounted prices).

Hoenir

p00hsticks said:

Hoenir said:

CGT is payable. While the transaction is indeed a gift. The disposal for nil consideration remains a taxable event for your father.  An obvious loophole that was filled many moons ago. 

But any CGT will need to be paid by father and aunt.

Most likely overlooked. Hence being gifted. The Aunt at least is getting paid for her share so has the money to settle the tax bill. 

Bookworm105

Hatechutney said:

Hi. My Father and his sister own a holiday house that was left to them years ago and has no mortgage on it. They are tenants in common. My Father kindly wants to gift me his half and my Aunt has agreed to sell me her half at half the market value of the whole house (as she currently has ownership of half). 

My question is about the Stamp Duty. Stamp  isn’t payable of gifts so I thought I would be paying on the purchase half only. However the solicitor seems to be saying the Stamp Duty would be on the full value of the house despite half of it being a gift. Thank you for any advice.  

I would be concerned about the competency of the solicitor unless they know more than you have told us... (particularly as you clearly state there is no outstanding mortgage on the property)

SDLT is payable on the chargeable consideration
In your case, the money paid to aunt is, of course, consideration. SDLT would be due if that amount is above the SDLT threshold 

Gifts are NOT chargeable consideration, point your solicitor at the section: "If you’re given property as a gift" 

Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK (www.gov.uk)

SDLT_Geek

Hatechutney said:

Hi. My Father and his sister own a holiday house that was left to them years ago and has no mortgage on it. They are tenants in common. My Father kindly wants to gift me his half and my Aunt has agreed to sell me her half at half the market value of the whole house (as she currently has ownership of half). 

My question is about the Stamp Duty. Stamp  isn’t payable of gifts so I thought I would be paying on the purchase half only. However the solicitor seems to be saying the Stamp Duty would be on the full value of the house despite half of it being a gift. Thank you for any advice.  

I agree with @Bookworm105.  

Is the property in England, so the relevant stamp duty is stamp duty land tax?

SDLT is due on the "chargeable consideration" which in this case I would expect to be the amount payable to the aunt.