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I have been told by my solicitor that my wife will be liable for Stamp Duty when I remortgage my portfolio from a sole owner to joint owners. This is because she will be a first time buyer.
In addition, I understand that she will be taxed the 3% on the existing mortg' and then 3% on the new mortgage. This sounds outrageous ! Is this true, anyone ?
Thank you in anticipation.
SDLT is complicated but id just note:
"I dont understand the 3% on existing and 3% on new" sounds odd. You only pay SDLT on purchaes not on "existing".
"wife liable for SDLT...... This is because she will be a first time buyer. "Well not because she is a FTB no.
Your wife will have to pay Stamp Duty because she is buying 50% of the property (you are selling 50% to her).
If she already owns ANY other property (be that Buy to Let or a Residential) then she will pay a 3% premium on the SDLT on the purchase of 50% of the property.Otherwise she wont.
I think you may be getting crossed wires - as to why she is paying SDLT and how much. Maybe go back to Solicitor to clarify.
Is there a real reason for your wife to own half of the property? .. If its because of mortgage affordability (two incomes are better than one) then there are "Guarantee" mortgages where Mrs income can be taken into concideration without her even being on the ownership title.
_________________________________________________________________________The above post is not financial advice, its often me rambling - passing time on a coffee break.If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance._________________________________________________________________________
Unfortunately most Solicitors don't seem to understand SDLT and make mistakes. I am regularly asked to advise on these matters.
To answer your question I would start by advising you that as a general rule transfers between Husband and Wife are treated as being tax neutral, which is to say there is no tax payable. One of the few exceptions to this rule is where a property is transferred from one Spouse to another where there is a mortgage involved. In that circumstance the mortgage is a transfer of a debt and SDLT is due on the value of the mortgage being transferred.
It should be noted however that the proportion of mortgage you are transferring is in the same proportion to the amount of the property you are transferring. So if you are transferring half the property it will be 50% of the mortgage. In addition where the value of that part of the mortgage is less than £40,000 then since that is the exempt level for SDLT on a second home there isn't any SDLT payable.
If as you suggest you make the transfer now and then remortgage the property with your wife as joint owner there is not a second lot of SDLT to pay. Fortunately the Chancellor only gets one bite of the cherry.
I assume you are doing this as part of some tax planning, probably to mitigate s24. Accordingly one thing you may wish to consider is to transfer the property as tenants in common rather than joint tenants. In that way you can restrict the percentage transferred to your wife and possibly stay under the £40k threshold.
Nigel Reynolds FCCA CMgr FCMI
Property Tax Specialist
Reynolds and Co