Examples of Transfer of Equity Stamp Duty
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1
Severing joint tenancy for tax purposes
John and Michelle own their a property as joint tenants. John and Michelle agree to sever the joint tenancy and own the property as tenants in common with a beneficial split of 99% to Michelle and 1% to John. The property is currently valued at £500,000 and the existing mortgage is £350,000.
Michelle doesn't pay any cash. The consideration for the transaction for stamp duty land tax is the additional existing debt Michelle takes on. As a joint tenant she is viewed for tax purposes to have a 50% share of the mortgage. As Michelle is receiving an additional 49% (99% less 50%) then she is taking on an additional 49% of the existing debt and stamp duty land tax is payable on the £171,500. As Michelle and John are married there no second home stamp duty, however there is standard rate stamp duty of £930. Click to use our up to date stamp duty calculator.
Beneficial interest in unequal shares for spouses or civil partners? You need to fill out a Form 17
HMRC will assume jointly owned property is shared equally for tax purposes unless declared to them in a Form 17. Click to read more about the Form 17 and how to fill it out online
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2
Transfer of equity to 99%/1% with unmarried partner and a second property
Jack owns a property on her own. Jack has a girlfriend Katherine and wants to give Katherine 99% of the property for tax purposes. The property is currently valued at £500,000 and the existing mortgage is £350,000. Jack owns another property.
Katherine pays £50,000 in cash. The consideration for the transaction for stamp duty land tax is:
- £50,000; plus
- 99% of the existing debt of £350,000 - £346,500
- £396,500 Total Consideration
As Jack and Katherine aren't married and Jack owns another property, second home stamp duty is payable as well as the standard rate stamp duty making the total liability £21,720 (£9,825 standard rate plus £11,895 second home rate). Click to use our up to date stamp duty calculator.
How do you declare and pay the stamp duty land tax?
You can file your stamp duty land tax return with HMRC by clicking here https://www.gov.uk/guidance/stamp-duty-land-tax-online-and-paper-returns and pay any liability by clicking here https://www.tax.service.gov.uk/pay/stamp-duty-land-tax/choose-a-way-to-pay.
We do not provide stamp duty land tax advice. You should call HMRC for help with Stamp Duty Land Tax queries and to confirm your own personal liability on 0300 200 3510 Opening times: 8.30am to 5pm, Monday to Friday (closed weekends).