Welcome To Varsity Finance



There are usually no stamp duty land tax (SDLT) implications when somebody acquires property as a gift or through inheritance. However, we sometimes overlook the potential for SDLT if there is a transfer of equity. Where somebody buys into a property, even when funded with a mortgage, they are considered to have made a taxable purchase.

FOR EXAMPLE; imagine Edwin and Eugini get married and decide to live in the house that Edwin already owns. It is worth £750,000 and has a mortgage of £300,000. After the honeymoon, Eugini is made joint owner of the property and becomes party to the mortgage. What is the situation regarding Stamp Duty Land Tax?

In effect, Eugini has acquired part of the property as a gift with no Stamp Duty Land Tax implications?However, she has purchased part of it with a joint mortgage of £300,000. She will be considered to have spent £150,000 and be assessed for Stamp Duty Land Tax that amount. This will be calculated as zero rate on the first £125,000 and 2% on the balance of £25,000 generating a total tax bill of £500.

Although she may not have owned property before, she cannot benefit from First Time Buyers discount as she is married to a homeowner. You also need to consider the opposite situation where somebody is buying out an ex- partner.

Equity release cases might also be caught. Toby and Petunia both own buy-to-let but live together in a house worth £2 million which is registered to Toby. They decide to take a lifetime mortgage on the house for £600,000 to pay off an interest only loan and build a conservatory.

To protect Petunia in case Toby dies first or requires full time residential care, they decide to put the property into joint names. Petunia will be assessed forStamp Duty Land Tax on £300,00 but, as she already owns other property, she may also have to pay the 3% supplement.