SDLT - cohabiting couple separating - 2 properties

[floehopper]

My ex-partner & I jointly own two properties, one our main home and the other a buy-to-let. We have joint mortgages on both properties.

The plan is for me to take full ownership of the buy-to-let property and move into it as my new home, and for my ex-partner to take full ownership of our former home. We would also each take over the other's share of the mortgage on each property.

Our main home is worth more than the buy-to-let property and so my ex-partner will also pay me a cash lump sum to compensate for the difference.

How would we calculate SDLT on all this?

[maths]

You are effectively purchasing a 50% interest in the BTL by simply taking over the mortgage. You are providing no additional cash consideration.
Hence your SDLT charge is based on the amount of 50% of the outstanding mortgage.

Your partner is similarly purchasing the 50% interest in the home by taking over 50% of the mortgage but also paying a cash sum.
Hence his SDLT charge is based on the amount of 50% of the outstanding mortgage plus the cash sum.

[floehopper]

Thanks. Does that mean that this is all regarded as a single transaction for SDLT purposes? In some sense the lump sum payment is the *net* result of a payment by me to my ex for the share in the BTL and a larger payment from my ex to me for the share in the main home. Can you reassure me that these payments are not taxed separately and it is only the net figure that is important?

[maths]

When I responded yesterday I didn't have access to the legislation. I need to check this as changes were made re "exchanges" of property which this seems to be (albeit some time ago).

My posting treated each transaction separately. I have seen this approach in the past but tend to feel that the SDLT should be based on an exchange.

[SDLT Geek]

Yes, I agree with maths that this could be a property "exchange" which could result in quite high SDLT for each party as there is a market value rule.

Perhaps the disentanglement of affairs could be structured as a "partition" of the two jointly owned properties. If so that might get around the market value rules. The analysis is not wholly straight forward with consideration arising through the mortgage dealings as well as the equality money.