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Where Taxpayers and Advisers Meet

SDLT on gifted property, pay off mortgage?

smiley111
Posts:17
Joined:Sun Jan 24, 2010 9:00 pm
SDLT on gifted property, pay off mortgage?

Postby smiley111 » Wed Apr 06, 2022 7:32 pm

Hi

I've read numerous threads but none seem to answer my specific situation, hence I'd be grateful if anyone can advise me here.

I'm gifting 50% of a property to my brother, Property value is £230k, Current Mortgage is £160k, I realise my brother will pay SDLT at 3% (due to this being a second property for him) on 50% of the current mortgage outstanding amount as it stands.

We have a re-mortgage offer in place in our Joint names.

my question is: If I pay off the outstanding mortgage prior to the transfer, due to it being a gift there will be no SDLT, however if I also subsequently re-mortgage for £160k all at the same time will SDLT become chargeable? and then secondly, If I made the re-mortgage a separate transaction, say a week after, then I assume that I would avoid any SDLT charge? ( solicitor says SDLT is paid on the existing mortgage redemption statement irrespective of any future mortgage)

I realise the gifted amount changes substantially and I also have CGT implications, but it's this one specific point on the SDLT that I'm struggling to be 100% clear on.

Thanks

bd6759
Posts:4256
Joined:Sat Feb 01, 2014 3:26 pm

Re: SDLT on gifted property, pay off mortgage?

Postby bd6759 » Wed Apr 06, 2022 8:49 pm

I think para 1A of Schedule 4 to Finance Act 2003 will apply.
A debt immediately before and after the transaction is treated as an assumption.

smiley111
Posts:17
Joined:Sun Jan 24, 2010 9:00 pm

Re: SDLT on gifted property, pay off mortgage?

Postby smiley111 » Mon Apr 11, 2022 12:30 pm

Hi

Thanks, I think I'll keep it straightforward, keep the mortgage and just pay the relevant stamp duty rather than trying to get clever and land in trouble...

Thanks


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