Transfer of property to your spouse
by Tarjinder Rayat — Posted on 11 October, 2019
We previously wrote a blog on Transfer of equity remortgage and stamp duty liability. This updated blog looks at the new rules regarding stamp duty which have been brought in for transfer of equity between spouses.
What were the rules for transfer of equity between spouses before 22nd November 2017?
Stamp Duty Land Tax (SDLT) is a tax collected by the government when all or part of an interest in land or property is transferred to you.
To take a look at our previous blog which outlines key information on this click here.
What are the rules for transfer of equity between spouses after 22nd November 2017?
On the 22nd November 2017 the government updated the rules in relation to transfer of equity between spouses. These new rules in the SDLT guidelines state that the higher rates will not apply for transfer of equity between spouses after the 22nd of November. If, for instance, the spouses own other properties, they will not be taken into account when calculating SDLT. These changes however are only applicable in relation to higher rates and not to SDLT in general. SDLT is still payable on 50% of the outstanding mortgage plus any cash consideration where one spouse is removed from the title.
In the past, stamp duty charged at a higher rate, however the government have since relaxed these rules for spouses. This means that spouses no longer have to pay the higher rate of stamp duty tax that they had been previously.
For more information please visit the HMRC website here.
Is stamp duty payable in a transfer of equity following a divorce?
There are certain circumstances in which you do not need to pay stamp duty in a transfer of equity between spouses. These circumstances are usually in cases where a couple are:
- dissolving a civil partnership
- annulling their marriage
- if they are legally separate
An example taken from the HMRC website where paying SDLT is not necessary:
If a house has a value of £180,000. The owner of the property has equity of £90,000 and an outstanding mortgage of £90,000. The owner transfers a half share of the property to their partner.
Their partner then pays cash for half of the equity totalling £45,000 and takes responsibility for the 50% that is outstanding on the mortgage also worth £45,000.
So, the SDLT is £90,000, made up of the:
– cash payment
– 50% share of the outstanding mortgage
£90,000 is below the current SDLT threshold so there’s no tax to pay. However, they must still tell HM Revenue and Customs (HMRC) about the transaction on a stamp duty return form. For more information please visit the HMRC website here.
Transfer of equity between spouses and remortgaging a property simultaneously
- It will be necessary to obtain your lender’s consent for a transfer of equity between spouses and this is something our solicitors can assist you with
- in situations where your lender does not grant consent you may need to remortgage. In these circumstances we recommend that you speak to Starck Uberoi Mortgages.
If you are looking to remortgage your property contact us on 020 8840 6640 or visit our mortgage page for more information
Can a solicitor act for both parties in a transfer of equity between spouses?
If the transfer of equity is occurring between family and they confirm that there is no conflict of interest, the solicitor is able to act for both parties; particularly in situations where parties are being added to the title, the solicitors are able to act on behalf of both parties. Lenders are happy to accept this position as long as the security of the loan is protected.
How Starck Uberoi can help
For more information about transfer of equity between spouses, stamp duty and remortgaging please see our previous blog here, visit our Conveyancing page, or to book an appointment please call 020 8840 6640. We are based in Ealing and London Belgravia. Our West London Ealing office is located 10 minutes from Ealing Broadway station. For an appointment at our London Belgravia office which is a few minutes from London Victoria Station please call 020 824 5118.