Stamp Duty on House Swap

[dent]

How much stamp duty will have to be paid by both parties if we swap houses. I am buying a house for 400,000 and my property is worth 300,000 will I only have to pay stamp duty on the difference?

[nwatson]

I have also been approached by a neighbour who would like to downsize their property while we are looking to extend. Potentially we could swap houses with me paying the difference. Values are 355,000 and 300,000. Could i sell my house for £1 and buy his for £55,000 therefore avoiding Stamp Duty for boht of us?

[wthomthom@aol.com]

I have heard that if you swap houses you can eliminate stamp duty or reduce it. But who knows about this. There must be some source.

[nwatson]

I am now proceeding with my house swap and my lawyer has told me how it is handled by the Inland Revenue. Stamp duty of £5 is paid for the lower priced property as it is deemed to be part of the consideration for the purchase of the more expensive property and not a purchase in itself.
The full stamp duty is then payable on the more expensive purchase.
Of course how they determine the true value is uncertain as you could reduce the "purchase" price of both maintaining the same differential in order to reduce the stamp duty. But, the purchase price will be used by the mortgage company to determine how much they will lend.

[wcrental@tiscali.co.]

How much stamp duty will have to be paid by both parties if we swap houses. I am buying a house for 400,000 and my property is worth 300,000 will I only have to pay stamp duty on the difference?

[nwatson]

I went ahead with the house swap with my neighbour and the rule is this:
Stamp duty is only payable on the more expensive property as the less expensive property is deemed to be exchanged as part of the purchase price and is not actually purchased itself.
So all that remains is to determine what the price of the more expensive house should be. Theoretically you could price the more expensive one at the price differential with the cheaper one valued at £1, but this will be reflected in the mortgage valuation and therefore the mortgage available for the purchase. Best to ask solicitor for advice here to see what valuation you should take. But there is a definite saving.