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Landlord Insider
On the Landlord Insider blog, you’ll find some excellent resources for landlords of all sizes. From the latest landlord news, to professional advice, tips and guides for landlords, there’s something for everyone. Brought to you by the excellent team behind the Landlord Vision property management software.

Tax Tips Q&A: Stamp Duty

As the stamp duty holiday is slowly being phased out, we thought it would be a good time to recap on some common stamp duty questions. These questions have been asked by the public and feature real-life scenarios where stamp duty might apply.  

These property questions and answers have been shared with us from Arthur Weller’s ‘247 Property Tax Questions Answered’. 

Will I Have To Pay Stamp Duty Land Tax When Leaving My Property To My Child? 

Question:  

I have a mortgage on my current residential home. However, I would like to purchase a new house to live in and leave the old one as a buy-to-let property. I would also like to leave it for my daughter for future security, but she is under-age at the moment. I presume I will fall foul of the extra stamp duty land tax (SDLT) on this second home even if it’s going to be my live-in property?  

Answer:  

Your presumption that you will have to pay the extra 3% SDLT on this second home even if it is going to be your next main residence is correct. However, if you gave away your current main residence to someone else and then bought your new house to live in, you would not have to pay the extra 3%, even though you are not selling to them (Stamp Duty Land Tax Manual – HMRC internal manual – GOV.UK (www.gov.uk)). When your daughter becomes of age this person can give the house to your daughter. But you would have to find someone you trust; and there could be capital gains tax when this person transfers to your daughter, if the house has gone up in value. You also have to consider the receipt of the rental income while the house is in the possession of this person. 

Do I Have To Pay Stamp Duty Land Tax On Property Share 

Question:  

I am currently buying my main home with my girlfriend. My parent’s house was mortgage-free when my dad died, and his share went to my mum. However, she passed his share to me by deed of variation. So, I now own 50% of that house. My mum wants to move and I want to buy her share with a mortgage so I can let it out. The property is valued at £400,000. I hope to get a mortgage to buy her share: £200,000. How much stamp duty land tax (SDLT) will I have to pay? I already own 50%, so surely I won’t need to pay tax on that?  

Answer 

It is not clear whether you are buying out the 50% share of your mother in the inherited house, and also buying your main home with your girlfriend (i.e. buying two houses), or only buying out your mother (i.e. only buying one house). On the assumption that it is the latter, or at least (if you are buying two houses) the inherited house will be the first house that you are buying – then there will be no extra 3% SDLT on the inherited house.  

See ‘Stamp Duty Land Tax – higher rates for purchases of additional residential properties’(https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-on-purchases-of-additional-residential-properties/stamp-duty-land-tax-higher-rates-on-purchases-of-additional-residential-properties). The SDLT on £200,000 is 2% on the amount above £125,000 (i.e. 2% on £75,000 = £1,500). 

Transfer Of House Pursuant To Consent Order – Is Stamp Duty Land Tax Payable? 

Question:  

I currently own a house in Exeter with my ex-wife. I am transferring the property pursuant to a consent order into mine and my girlfriend’s name. My ex-wife is receiving a lump sum of money and we are repaying the existing mortgage and taking a new mortgage in our joint names. Am I liable to any stamp duty land tax?  

Answer:  

If you look at www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00550 you can see that certain transactions on the ending of a marriage are exempt from stamp duty land tax. These transactions are those made between the parties to the marriage as a result of:  

  • certain types of court order;  
  • an agreement between the spouses/partners in contemplation or in connection to the dissolution or annulment of their marriage or civil partnership; or  
  • their judicial separation or a separation order. 

However, the exemption is not available if the transaction involves someone other than the spouses or civil partners. So, it is worth checking to see whether it makes a difference that the property is being transferred into the names of both you and your girlfriend. 

For more stamp duty questions and answers as well as other common tax questions, Arthur Weller’s full book ‘247 Property Tax Questions Answered’ is available in the Landlords’ Tax Pack

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