Stamp Duty with Mum paying off mortgage

Rubbishcook123

Hi All, 
I've read quite a few discussions on this but it didn't quite fit our situation so would be grateful for any ideas.

It was always our plan to sell mum's house and buy a place with an annexe for the 5 of us to live in.  When we offered on the property, we were told that we would only get it if we were chain free. 

We were lucky that we could just about get a mortgage but because of her age (and therefore the cost of repayment) she couldn't be on the title.  It was always the plan that she would own 50% and us 50%.  Now she has sold and has paid off the mortgage (we do appreciate how lucky we are) and would like her name added to the title because of inheritance tax relief for owning a property.

We were told that we might have to pay Stamp Duty for "selling" the share to her.  This seems mad as she's been living in the house since we moved in 3 years ago.  Would the intention and the situation we were forced into be a way round the Stamp duty? 

Thanks

DE_612183

I think stamp duty is about paying tax when you exchange payment for land property of a share of same - therefore if you "sell" half of the property to your mother SHE will pay stamp duty on that half of it.

Keep_pedalling

The reason you want to get her on the deeds as actually not required, your mother’s estate can still clamp the residential NRB under the downsizing rules.

If she is happy to make this a gift then while she lives in the property it will not be covered by the 7 year rule so will remain part of her estate for IHT purposes. If this would leave her with little in the way of other significant assets then for her long term security she could make this an interest free loan protected by a charge on the property.

Bookworm105

you need a better understanding of inheritance tax - keep_pedalling gives you a starter.

there is nothing mad about taxing movement of wealth amongst family members, otherwise everyone would be playing games to be tax free

mother has "paid off the mortgage" (presumably on the house you now all live in)
you wish to make mother 50% owner of said house 

in SDLT terms there has been an exchange of "chargeable consideration" - she paid off the mortgage and in return gets a share of ownership. SDLT would be payable on her "share" of mortgage paid off - as you state ownership is 50/50 then the chargeable consideration is the mortgage value (assuming the mortgage was in your names to start with) 

see section : 

If you transfer or divide up jointly-owned property or land: unmarried couples and other joint owners
Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK

SDLT_Geek

Rubbishcook123 said:

Hi All, 
I've read quite a few discussions on this but it didn't quite fit our situation so would be grateful for any ideas.

It was always our plan to sell mum's house and buy a place with an annexe for the 5 of us to live in.  When we offered on the property, we were told that we would only get it if we were chain free. 

We were lucky that we could just about get a mortgage but because of her age (and therefore the cost of repayment) she couldn't be on the title.  It was always the plan that she would own 50% and us 50%.  Now she has sold and has paid off the mortgage (we do appreciate how lucky we are) and would like her name added to the title because of inheritance tax relief for owning a property.

We were told that we might have to pay Stamp Duty for "selling" the share to her.  This seems mad as she's been living in the house since we moved in 3 years ago.  Would the intention and the situation we were forced into be a way round the Stamp duty? 

Thanks

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

The starting point here for SDLT would be to work out who now owns the property beneficially.  That might not be the same people who are registered proprietors on the registered title. 

(a)  Perhaps there was a declaration of trust setting out the shares? 

(b)  Did she put in any capital at the time of the purchase?  If so, did she sign something to say it was a gift?

If she does not already have a beneficial interest in the property, then she makes an "acquisition" for SDLT purposes when you transfer her a share.  The "chargeable consideration" is what she pays for it, which seems likely to include the sum for paying off the mortgage.

Rubbishcook123

Thanks all, the annoying part is that if we were able to sell her house and buy in a chain, we wouldn't have had this issue as we would all be on the register from day 1.