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Where Taxpayers and Advisers Meet

Beneficial ownership and stamp duty

LBFLondon
Posts: 2
Joined: Tue Mar 05, 2019 12:11 pm

Beneficial ownership and stamp duty

Postby LBFLondon » Tue Mar 05, 2019 12:19 pm

My partner owns a property valued at £1,400,000 with a mortgage of £1,190,000. If I move into the property as my main home (owning no other home), and he transfers beneficial ownership to me, am I liable for stamp duty? If I am also added to the mortgage, would I become liable for stamp duty? And as a cohabiting couple, if I am a beneficial owner, in the event of his death, am I liable for inheritance tax?
Thank you

AGoodman
Posts: 860
Joined: Fri May 16, 2014 3:47 pm

Re: Beneficial ownership and stamp duty

Postby AGoodman » Tue Mar 05, 2019 12:48 pm

1. A beneficial transfer to you is probably a breach of his mortgage terms but would not be subject to SDLT
2. If you took over all or part of the mortgage debt, this would be consideration and you would pay SDLT (if you became sole beneficial owner and jointly liable for the mortgage, you would likely be deemed to have paid the full amount of the mortgage to him as deemed consideration.
3. In the event of his death, his estate would be liable to IHT on the property as he has given it away but reserved a benefit by continuing to live there. You could be liable as a recipient of the gift or as the owner of the property which was the subject of the charge. The exact analysis depends on the terms of the "gift" - i.e. it would be very different if you were taking on all the mortgage debt.

For these sums, you should really get proper advice.

LBFLondon
Posts: 2
Joined: Tue Mar 05, 2019 12:11 pm

Re: Beneficial ownership and stamp duty

Postby LBFLondon » Tue Mar 05, 2019 12:52 pm

Thank you

maths
Posts: 7562
Joined: Wed Aug 06, 2008 3:25 pm

Re: Beneficial ownership and stamp duty

Postby maths » Tue Mar 05, 2019 5:29 pm

I assume you are not in a civil partnership or married.

I'm unclear as to what you are both trying to achieve?

The SDLT position depends upon the terms of the gift; basically, the extent to which you assume liability (if any) for any part of the mortgage liability (irrespective of whether you become a party to the loan agreement with the mortgagee or not).

As AGoodman points out the reservation of benefit IHT provisions may apply in which case on his death the property will still be treated as part of his estate for IHT. However, the primary liability to discharge the IHT attributable to the property would be yours not his [IHTA 1984 s.200(1)(c)] (AGoodman appears to have a different view on this).

No CGT charge should arise on his gift to you assuming the property has been his sole or main residence for CGT since he owned it.


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