Transfer of Equity - Stamp Duty? (No Mortgage)

Grizzly_Bears

Hello.

I need some advice please.

In 2023 my wife purchased a 'new' home (for us) with her own funds in her name only. [Let's say it was £1Mn].

Last year I sold my property [Let's say for £500k]. (it was solely in my name)

We now want to co-own the 'new' home with me taking a 50% share and understand we will need to arrange this via a Transfer of Equity.

Question is, if we simply indicate the 50% share, with no 'consideration' (which is how HMRC phrase the exchange of money in exchange for equity/Stamp Duty) in terms financial transfer, while this would negate the need for Stamp Duty, what is to stop me simply giving my wife the £500k at a later date?

Would appreciate any feedback.

SDLT_Geek

Grizzly_Bears said:

Hello.

I need some advice please.

In 2023 my wife purchased a 'new' home (for us) with her own funds in her name only. [Let's say it was £1Mn].

Last year I sold my property [Let's say for £500k]. (it was solely in my name)

We now want to co-own the 'new' home with me taking a 50% share and understand we will need to arrange this via a Transfer of Equity.

Question is, if we simply indicate the 50% share, with no 'consideration' (which is how HMRC phrase the exchange of money in exchange for equity/Stamp Duty) in terms financial transfer, while this would negate the need for Stamp Duty, what is to stop me simply giving my wife the £500k at a later date?

Would appreciate any feedback.

Is the property in England?  (So the relevant stamp duty is stamp duty land tax.)

[Edited: I see from the heading that there is no mortgage.]

You might need to go back a step first.  When your wife bought the property alone in 2023 were you married?  Was the extra 3% SDLT due at the time because of you owning your property?  If so, did the sale of your property last year entitle her to recover the extra 3% SDLT and has that been done?

If we have that background, then we will be able to help more on what you now propose.

Grizzly_Bears

Yes - The property is in England.

Confirmed - There is no Mortgage involved

Yes - We were Married in 2023.

Extra 3% SDLT was not a factor (From what I recall).

Bookworm105

Grizzly_Bears said:

Extra 3% SDLT was not a factor (From what I recall).

sorry but more info needed.
That legal ownership may be recorded in a sole name is overridden for SDLT purposes by the fact of being married as a married couple is treated as a single "unit" in terms of tax. 

where were you, as a couple, living as your main home? In your property? In a, so far unmentioned, property?

Your wife purchased a new property whilst you retained yours, so as a married couple you ended up owning an additional property and thus higher rate SDLT might have applied depending on what happened to that main home?

Grizzly_Bears

We were not living together in my house.
My wife was renting and we did not co-habit until we bought the new 'Main' property.
Hope that helps?

SDLT_Geek

Grizzly_Bears said:

We were not living together in my house.
My wife was renting and we did not co-habit until we bought the new 'Main' property.
Hope that helps?

To be able to understand the starting point, it would be useful to know:

(a)  Where you had been living in the three years before your wife's 2023 purchase (particularly if for some of the time it was in a property you owned which was later sold).

(b)  Where your wife was living for the same three year period (you mention she was renting, was that for the whole of the three years before).

It sounds quite possible that she should have paid the extra 3% when she bought, but that depending on the detail, it might not be too late to put that right now.

Grizzly_Bears

A.) I had been living in the property I’ve outlined (the one that sold last year) above for many years. My wife lived some distance away and due to our situation with children/schools etc we did not live together in my house.

B.) My wife had been living with family she and then renting in the 3 years up to the time she purchased the ‘new’ house.

SDLT_Geek

Grizzly_Bears said:

A.) I had been living in the property I’ve outlined (the one that sold last year) above for many years. My wife lived some distance away and due to our situation with children/schools etc we did not live together in my house.

B.) My wife had been living with family she and then renting in the 3 years up to the time she purchased the ‘new’ house.

Given that I understand you were married when she bought in 2023, I would expect that the 3% extra SDLT would have been due on her sole purchase, because of you owning a property.

But it sounds as if that 3% would have been recoverable by her when you sold your property last year.  She had 12 months from your sale to reclaim the extra 3%.  Is she still in time?  If so, she should seek advice on regularising the position so as to avoid a very nasty surprise in the future when it is too late.

This is all very fact dependent, so it is likely to be best for her to go back to the solicitors who acted for her on the purchase and review the position.

Grizzly_Bears

I can confirm that she did not pay the extra 3% SDLT.

Either way, does this effect my original question?

SDLT_Geek

Grizzly_Bears said:

I can confirm that she did not pay the extra 3% SDLT.

Either way, does this effect my original question?

You might have trouble moving to the next stage without sorting out the position for what has already happened. 

It is fine if there is a reason why she did not pay the extra 3%, but from what you have said, it sounds as if this was due.  But it might not be too late to regularise the position.  Was your sale within the last 12 months?  If it is close to the 12 months, then there might be little time to act.

Looking at your original question: It seems clear that if you later pay your wife the £500K in the circumstances you describe, it would be seen as "consideration" for your acquisition of a share in her property, so SDLT would be due again.

Grizzly_Bears

Going back to my original question - How would HMRC know if I simply paid my wife the equity later?