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Transfer of Equity - Stamp Duty

Howson
Posts: 30
Joined: Wed Feb 13, 2013 4:14 pm

Transfer of Equity - Stamp Duty

Postby Howson » Fri May 12, 2017 12:35 pm

Would stamp duty be due in the following scenario (and how much please ?) :

A Buy-to-Let property is in sole ownership & rented out, value at £250k, with a mortgage at £150k.
Owner would like to add partner (unmarried) onto property, and, at the same time release further cash via a higher mortgage - en extra £40k.
So ownership would then be 50/50.

Thank you all,

someone
Posts: 131
Joined: Mon Feb 13, 2017 10:09 am

Re: Transfer of Equity - Stamp Duty

Postby someone » Sun May 14, 2017 8:26 am

Depends on whether partner owns another home.

If not then no SDLT - below 125k

If yes then 3% on half mortgage. I'm not sure if it's the before or after value. I would expect doing it as two separate transactions would make it the starting mortgage BICBW.

(nb this changes if they marry - then it's 3% if either own property.)

Howson
Posts: 30
Joined: Wed Feb 13, 2013 4:14 pm

Re: Transfer of Equity - Stamp Duty

Postby Howson » Wed May 17, 2017 8:17 am

Thanks 'Someone', it seems a complicated area, with nt much clarity.
Yes, the incoming owns another property so I believe 3% due on 50% of the mortgage (75k x 3%) = £2250.

On further digging I think there may be anomoly, in that that the ownership is split disproportionaltely, with incoming owning £40k or less, then no duty is due...

someone
Posts: 131
Joined: Mon Feb 13, 2017 10:09 am

Re: Transfer of Equity - Stamp Duty

Postby someone » Wed May 17, 2017 9:19 am

That is correct. An interest of less than 40K doesn't attract stamp duty.

As they are unmarried, the partner could be given a stake of less than 50% but then the rental income split differently (PIM1030) if desired.

N.B. There's some dispute as to whether PIM1030 still applies as there are now regulations related to transfers of income streams being taxed on their market value on the seller. My (non-expert) opinion is that provided that either owner of the property has the ability to trigger the sale of the property and recover their capital invested then the income stream would be equivalent to the income stream from a callable bond and so have close to zero market value.

Howson
Posts: 30
Joined: Wed Feb 13, 2013 4:14 pm

Re: Transfer of Equity - Stamp Duty

Postby Howson » Sun May 21, 2017 8:33 pm

Thanks for the info, much appreciated.
I'm sure more clarity will be forthcoming over time.


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