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Where Taxpayers and Advisers Meet

SDLT on Gift of Property from Spouse

Hoppity
Posts:4
Joined:Sun Mar 08, 2020 7:27 pm
SDLT on Gift of Property from Spouse

Postby Hoppity » Tue Mar 10, 2020 10:48 pm

I am a bit confused about the SDLT rules for gifts of property with a mortgage.

Our situation is that we (unmarried couple) own our old PPR now let out as BTL. I think we own it as joint tenants with equal share. I don’t think we are tenants in common at 50:50 but I might be wrong.

Property purchased on 2004 at £340k.
Property currently worth £600k with £220k outstanding BTL mortgage.

We are getting married in the next month. Partner is 40% tax-payer, I am not. Thus we want to gift the property into solely my name (or 99% mine if needed), but keep his name on mortgage, otherwise we may struggle when it comes to remortgaging.

How do I calculate SDLT on the gift?

Thank you for your advice.

Hoppity
Posts:4
Joined:Sun Mar 08, 2020 7:27 pm

Re: SDLT on Gift of Property from Spouse

Postby Hoppity » Tue Mar 10, 2020 10:51 pm

I forgot to say that the mortgage is currently in both our names, and we would want this to continue to be the case.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: SDLT on Gift of Property from Spouse

Postby AGoodman » Wed Mar 11, 2020 11:16 am

Legal (registered) title will have to stay in both your names. The mortgage company won't allow one of you to come off without re-mortgaging.

You can transfer any/all of the beneficial interest. SDLT is charged on chargeable consideration, including deemed consideration.

This means that if you went to 100:0% the deemed consideration would be £110,000, under the £125,000 threshold so no SDLT to pay.

You will need a declaration of trust and to submit Form 17 to HMRC to avoid the tax assumption that all marital properties are owned 50:50.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on Gift of Property from Spouse

Postby maths » Wed Mar 11, 2020 3:51 pm

Assuming the wife who is acquiring an additional interest over her current 50% already has an interest in another property (eg the one she currently lives in) then if she acquires the additional share before her marriage then the 3% surcharge applies (as para 7A is inapplicable) to the assumption of mortgage consideration?

If the 3% does apply then wife shouldn't assume responsibility for any part of the mortgage (over and above her current 50% liability)?

If married Para 9A applies (hence no 3%)?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on Gift of Property from Spouse

Postby maths » Wed Mar 11, 2020 9:31 pm

My post should have included "AG, any comments?"

Hoppity
Posts:4
Joined:Sun Mar 08, 2020 7:27 pm

Re: SDLT on Gift of Property from Spouse

Postby Hoppity » Wed Mar 11, 2020 9:52 pm

Thank you for your responses. I will acquire the additional share after we get married, so no 3% surcharge should apply.

Thank you for telling me about form 17, I was trying to find out which one it was.

A solicitor told me to check that HMRC will accept a 99:1 ownership ratio as tenants in common (we are 50:50 TICs presently), as they usually do 90:10. Personally, I wouldn’t have thought HMRC could set a limit on the ratio, but maybe I am wrong?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on Gift of Property from Spouse

Postby maths » Wed Mar 11, 2020 11:26 pm

You can choose whatever ration you choose; 90/10; 95/5; 99/1; or even 100/0.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: SDLT on Gift of Property from Spouse

Postby AGoodman » Thu Mar 12, 2020 3:09 pm

stamp duty should not be this hard.

But yes (he says with hindsight) I was assuming this would take place after the marriage.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: SDLT on Gift of Property from Spouse

Postby maths » Thu Mar 12, 2020 3:14 pm

Everything's hard.

I once asked a few barristers why they didn't answer queries on the TDF and taxation web.

They all said because if we miss something or get it wrong then it's not good for business !!


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