Transferring your beneficial interest in property is common between spouses and civil partners, especially when looking to utilise each other's income tax free allowance (read our other article on
Capital Gains Tax on Property for Married Couples).
The stamp duty on transfer of property between spouses changed on the 22nd November 2017 in relation to the additional rate of stamp duty, however there still could be stamp duty to pay. In this article we explain the stamp duty liability where a husband or a wife owns a property solely and is looking to complete a transfer of equity to jointly own the property with their spouse. There are other ways of sharing the beneficial ownership which we explain here -
How to transfer ownership of property to your wife or husband
What are the stamp duty rules for a transfer of equity?
You don’t pay Stamp Duty Land Tax (SDLT) if you transfer an interest in land or property to your partner as part of an agreement or court order because you’re either:
- divorcing
- dissolving a civil partnership
This also applies if the partners either:
- annul their marriage
- legally separate
In these cases there’s no need to tell HMRC about the transfer, even if the value is more than the Stamp Duty Land Tax threshold.
In all other cases, stamp duty is payable on the total consideration being paid. To work out the total consideration you add the consideration being paid for the share of the property and the new owner’s share of the existing mortgage debt. If the total consideration exceeds the stamp duty threshold, then stamp duty is payable at the prevailing rate.
The payment (consideration) can take the form of cash, the giving of goods (giving a personal possession in exchange for the land/property), providing works or services (giving work or a service in exchange for the land or property), release from a debt, transfer of a debt, including the balance of an outstanding mortgage.
For example, Kelvin owns a property and wants to add on his wife Janet. Janet is not paying any money for her share of the property. The existing mortgage on completion is £300,000 and neither Kelvin or Janet own a beneficial interest in any other property.
Type of consideration |
Amount of consideration |
|
Consideration paid for share of property
|
£0 as Janet is not paying any money for her share of the proeprty
|
|
Existing Debt (not the new mortgage)
|
£300,000 / 2 Kelvin and Janet = £150,000
|
Total consideration used for stamp duty land tax calculation
|
£150,000
|
In the example above the figure used for consideration to calculate the stamp duty payable is £150,000. You can find out how much stamp duty Janet and Kelvin have to pay by using the button below.
* Free to use - No personal details required - Instant up to date results
Do you need help evidencing an unequal share of property for Income Tax purposes?
We specialise in the transferring of property between married couples for income tax purposes and our solicitors can help you with:
No time for forms? Call us now on 0333 344 3234 (local call charges apply)
