Stamp duty land tax.

[Danny_Boy 10]

Help regarding stamp duty, in the industry I am in I have a bit of knowledge on SDLT but you know what they say about a bit of knowledge being dangerous.

 

I have approached a solicitor I work with who told me he can't answer these questions and gave me HMRC's number. I rang them and spoke to what must have been a call centre worker who could not really answer my question with any confidence. So I am here hoping that the forum can help me out.

 

A buy to let worth £900k, currently owned by husband, husband wants to put wife on the deeds, will this generate and payment of SDLT? Both wife and husband own a residential property together.

[rudds1 102]

Help regarding stamp duty, in the industry I am in I have a bit of knowledge on SDLT but you know what they say about a bit of knowledge being dangerous.

 

I have approached a solicitor I work with who told me he can't answer these questions and gave me HMRC's number. I rang them and spoke to what must have been a call centre worker who could not really answer my question with any confidence. So I am here hoping that the forum can help me out.

 

A buy to let worth £900k, currently owned by husband, husband wants to put wife on the deeds, will this generate and payment of SDLT? Both wife and husband own a residential property together.

 

I'd say Jeffrey shaw is your man to speak to about this

[Jeffrey Shaw 93]

Help regarding stamp duty, in the industry I am in I have a bit of knowledge on SDLT but you know what they say about a bit of knowledge being dangerous.

 

I have approached a solicitor I work with who told me he can't answer these questions and gave me HMRC's number. I rang them and spoke to what must have been a call centre worker who could not really answer my question with any confidence. So I am here hoping that the forum can help me out.

 

A buy to let worth £900k, currently owned by husband, husband wants to put wife on the deeds, will this generate and payment of SDLT? Both wife and husband own a residential property together.

 

I'd say Jeffrey shaw is your man to speak to about this

Hello!

SDLT is nowadays extremely complex, far more so than either:

a. how it was initially; and

b. its predecessor, Stamp Duty.

 

And HMRC is very unhelpful in complex cases- I know, I tried (and failed) to obtain a meaningful answer in an even more complex matter with which I dealt a year or two ago.

 

But, to answer OP's question: if H is just transferring by gift an unmortgaged property (whether to H+W or to only W), no SDLT is payable in that case.

 

It does not apply (no matter what else the transferee(s) might own) if:

a. the transaction is a gift; and

b. the property given is unmortgaged.

[Cyclone 10]

Help regarding stamp duty, in the industry I am in I have a bit of knowledge on SDLT but you know what they say about a bit of knowledge being dangerous.

 

I have approached a solicitor I work with who told me he can't answer these questions and gave me HMRC's number. I rang them and spoke to what must have been a call centre worker who could not really answer my question with any confidence. So I am here hoping that the forum can help me out.

 

A buy to let worth £900k, currently owned by husband, husband wants to put wife on the deeds, will this generate and payment of SDLT? Both wife and husband own a residential property together.

 

I'm going to speculate, but in general husband and wife can exchange any and all assets without attracting any tax. This is true in most cases, I can't see why the ownership of a BTL would be any different. There is no sale of the property taking place, and SD only applies to sales.

 

---------- Post added 02-05-2017 at 17:05 ----------

 

Hello!

SDLT is nowadays extremely complex, far more so than either:

a. how it was initially; and

b. its predecessor, Stamp Duty.

 

And HMRC is very unhelpful in complex cases- I know, I tried (and failed) to obtain a meaningful answer in an even more complex matter with which I dealt a year or two ago.

 

But, to answer OP's question: if H is just transferring by gift an unmortgaged property (whether to H+W or to only W), no SDLT is payable in that case.

 

It does not apply (no matter what else the transferee(s) might own) if:

a. the transaction is a gift; and

b. the property given is unmortgaged.

 

If the gift were to someone other than a spouse though, then inheritance tax clawback rules would apply (were the giftee to die within 7 years) and/or councils would be able to make claims against the asset for care home fee's for a similar duration.

[Jeffrey Shaw 93]

I'm going to speculate, but in general husband and wife can exchange any and all assets without attracting any tax. This is true in most cases, I can't see why the ownership of a BTL would be any different. There is no sale of the property taking place, and SD only applies to sales.

No, because:

a. Stamp Duty does not apply at all (other to purchase of stocks and shares); and

b. SDLT applies only to purchase (inc. lease) of property or where a supposed gift involves 'consideration' as defined.

 

If the gift were to someone other than a spouse though, then inheritance tax clawback rules would apply (were the giftee to die within 7 years) and/or councils would be able to make claims against the asset for care home fee's for a similar duration.

Yes, but OP did ask about just SDLT.

[Danny_Boy 10]

Hello!

SDLT is nowadays extremely complex, far more so than either:

a. how it was initially; and

b. its predecessor, Stamp Duty.

 

And HMRC is very unhelpful in complex cases- I know, I tried (and failed) to obtain a meaningful answer in an even more complex matter with which I dealt a year or two ago.

 

But, to answer OP's question: if H is just transferring by gift an unmortgaged property (whether to H+W or to only W), no SDLT is payable in that case.

 

It does not apply (no matter what else the transferee(s) might own) if:

a. the transaction is a gift; and

b. the property given is unmortgaged.

 

Brilliant thank you Jeffrey your expertise is much appreciated.

 

Okay so how would a mortgage on said property complicate things? Current balance around half a million, Wife currently not on mortgage but will be?

 

Thanks again.

 

---------- Post added 02-05-2017 at 17:53 ----------

 

I'm going to speculate, but in general husband and wife can exchange any and all assets without attracting any tax. This is true in most cases, I can't see why the ownership of a BTL would be any different. There is no sale of the property taking place, and SD only applies to sales.

 

---------- Post added 02-05-2017 at 17:05 ----------

 

 

If the gift were to someone other than a spouse though, then inheritance tax clawback rules would apply (were the giftee to die within 7 years) and/or councils would be able to make claims against the asset for care home fee's for a similar duration.

 

Thanks Cyclone as well, very helpful.

[Cyclone 10]

Presumably the charge against the property stops you being able to simply give away the property, otherwise it would be an easy way to 'gain' assets as a family. Person A takes out mortgage, buys house, gives house away, declares bankruptcy, bank gets nothing back, family now owns house outright.

 

In which case the mortgage company might allow the mortgagee to be changed, but if not and they required a new mortgage to be taken out by the spouse then it would in effect become a sale wouldn't it, and SDLT (don't forget the LT or Jeffrey will get you) applies to sales, even between family members.

[Danny_Boy 10]

Presumably the charge against the property stops you being able to simply give away the property, otherwise it would be an easy way to 'gain' assets as a family. Person A takes out mortgage, buys house, gives house away, declares bankruptcy, bank gets nothing back, family now owns house outright.

 

In which case the mortgage company might allow the mortgagee to be changed, but if not and they required a new mortgage to be taken out by the spouse then it would in effect become a sale wouldn't it, and SDLT (don't forget the LT or Jeffrey will get you) applies to sales, even between family members.

 

So if there's a mortgage it's a sale transaction rather than a gift and therefor SDLT due. There will be a transfer of equity but can it still not be classed as a gift if there is a mortgage?

[Cyclone 10]

I'd wait for a definite answer from Jeffrey, I'm speculating.

But my speculation had a maybe in it. If the mortgage provider will let the mortgage be transferred instead of requiring a new one, then it wouldn't be a sale.

Perhaps with spouses that could be done by first making it a joint mortgage, it probably depends on the mortgage provider though.

[Danny_Boy 10]

I'd wait for a definite answer from Jeffrey, I'm speculating.

But my speculation had a maybe in it. If the mortgage provider will let the mortgage be transferred instead of requiring a new one, then it wouldn't be a sale.

Perhaps with spouses that could be done by first making it a joint mortgage, it probably depends on the mortgage provider though.

 

Thanks, changing the current mortgage to joint names isn't an option so there will be a mortgage involved.

[Jeffrey Shaw 93]

The rule is this: where the Transferor owns subject to a mortgage and transfers the mortgaged property to joint names with another person, he/she is effectively sharing the burden of the mortgage covenants. That is seen by HMRC as chargeable consideration, unless- rarely- the Transfer deed EXPLICITLY states that:

a. all the burden remains with the Transferor and

b. he/she indemnifies the new co-owner against them; and

c. there is no new mortgage covenant given by that new co-owner in favour of either the Transferor or the mortgagee; and

d. no money consideration is passing either.

[Danny_Boy 10]

The rule is this: where the Transferor owns subject to a mortgage and transfers the mortgaged property to joint names with another person, he/she is effectively sharing the burden of the mortgage covenants. That is seen by HMRC as chargeable consideration, unless- rarely- the Transfer deed EXPLICITLY states that:

a. all the burden remains with the Transferor and

b. he/she indemnifies the new co-owner against them; and

c. there is no new mortgage covenant given by that new co-owner in favour of either the Transferor or the mortgagee; and

d. no money consideration is passing either.

 

Thank you, very helpful and also shows the complexity of it all.