Will adding my partner to the deeds of my house make us liable for Stamp Duty?

Hello,

A little advice required please. If I remortgage my property and at the same time add my partner to the deeds (and the new mortgage), what is the liability for stamp duty? At the moment, the mortgage and deeds are in my name only. I'm hoping that the liability, if any, will be for half the amount of the mortgage, which will be less than the £120,000 threshold.

Thanks in advance for any help. Martin.

P.S. I have looked at some older threads on the subject but didn't really find a definitive answer.

Reply to
mnetley
Loading thread data ...

A little advice required please. If I remortgage my property and at the same time add my partner to the deeds (and the new mortgage), what is the liability for stamp duty? At the moment, the mortgage and deeds are in my name only. I'm hoping that the liability, if any, will be for half the amount of the mortgage, which will be less than the 120,000 threshold.

Thanks in advance for any help. Martin.

P.S. I have looked at some older threads on the subject but didn't really find a definitive answer.

Assuming she is only acquiring a 50% share (as seems likely) in the property, she is deemed to be assuming 50% of the mortgage for SDLT purposes.

Reply to
Doug Ramage

Hang on. Martin is not *selling* half the proerty to his partner. Are not transfers for no consideration exempt from, or beyond the scope, of SDLT?

Reply to
Ronald Raygun

Indeed they are, RR.

But his partner is assuming responsibility for a debt - which is "consideration", and thus chargeable.

Reply to
Doug Ramage

Consideration is something which A gives to B in exchange for something.

Although the partner is assuming responsibility for debt, Martin is not simultaneously being relieved of responsibility for part of the debt he originally took on when buying the place. In most joint loan agreements the debt is joint and several, so unless that exceptionally is not the case here, then even though the partner may in some sense be "giving" something, it's not at all clear to whom it is being given, since Martin isn't "getting" anything, so it's difficult to see how it can be deemed consideration.

Reply to
Ronald Raygun

A little advice required please. If I remortgage my property and at the same time add my partner to the deeds (and the new mortgage), what is the liability for stamp duty? At the moment, the mortgage and deeds are in my name only. I'm hoping that the liability, if any, will be for half the amount of the mortgage, which will be less than the 120,000 threshold.

A few years back I put 50,000 deposit on a property while my parter put in 7,000. 18 month later when she buggered off she wanted the house sold and 50% of the 58,000 we paid in between us.

Reply to
informer

Thanks for the advice. It seems there are differering opinions as to whether there is any SDLT liability, but even if it turns out that there is, hopefully only 50% of the mortgage will be considered, which will fall under the £120,000 threshold. Fingers crossed.

Thanks again, Martin.

Reply to
mnetley

RR, I think you are looking at the transaction from the wrong aspect. SDLT falls on the purchaser - i.e. Martin's partner. She has acquired an interest in land in return for assuming responsibility for a debt - i.e. non cash consideration.

Your point about joint and several liability did cause concern, as it could be argued that the consideration was the whole of the debt. So para 8(1B) Schedule 4 FA 2003 clarifies the issue so that debt assumed is proportional to the interest acquired :

"...[(1B) Where in a case in which sub-paragraph (1)(b) applies- (a) the debt assumed is or includes debt secured on the property forming the subject-matter of the transaction, and (b) immediately before the transaction there were two or more persons each holding an undivided share of that property, or there are two or more such persons immediately afterwards, the amount of secured debt assumed shall be determined as if the amount of that debt owed by each of those persons at a given time were the proportion of it corresponding to his undivided share of the property at that time.]"

Reply to
Doug Ramage

Thanks again, Martin.

Your solicitor should be able to confirm the position for you.

Reply to
Doug Ramage

If it were an actual purchase in return for agreeing to assume shared responsibility for the debt, I'd agree, but I'm not sure we have enough evidence to deduce that those are the facts of the case. I see it as the partner acquiring a share of the interest by way of an unconditional gift and not in return for anything -- so there is no purchase. She is co-signing on the mortgage only because her consent to the mortgage is a pre-condition to the lender agreeing to permit the transfer to be recorded.

That by so doing she is also taking on joint liability for the debt could thus be purely incidental to the transfer and not material to it.

On the other hand, we don't know the motivation -- it *could* be material: He said he wanted to remortgage, and if that means he wanted to increase his borrowing, or has suffered a reduction in earnings, and needs hers to meet lending criteria, then we could indeed be looking at an "in return for" situation.

Reply to
Ronald Raygun

SDLT has not introduced anything new here, it was the same for Stamp Duty.

Not much of a "gift", if I have to become a mortgagor. :)

Reply to
Doug Ramage

Think of it as a gift of half the equity.

The condition of becoming a mortgagor is not imposed by the donor, but by the mortgagee, and I find it difficult to recognise as consideration anything which the imputed "vendor" does not in fact receive.

To my way of thinking, the definition of consideration is that which a vendor accepts in return for an asset he transfers to a purchaser.

If the "vendor" receives nothing in return for the transfer, and in the case of joint and several liability, he does not in fact benefit from any reduction in responsibility for the debt) then I see it as there being no consideration, and consequently the transfer cannot be a sale.

If the donee were actually to undertake (with the donor, not the lender) to pay her share of the mortgage interest/debt, I'd agree this would amount to implied consideration, but we don't know this to be the case. She might not have any income, and could just be an offspring breeding machine. I'm sure counting *that* as consideration would go down well with the sex discrimination folks. :-)

Reply to
Ronald Raygun

My partner does indeed have an income and will be contributing to the mortgage repayments. The original mortgage was not jointly in her name as she was working in the U.S. at the time. For reasons unknown I didn't add her name to the title deeds when originally purchasing the propery. We are re-mortgaging purely to get a better interest rate than we currently have. The house will be in joint names in equal part but nothing will be written down as such, unless that is necessary or helpful. Our new mortgage will be about £4k more than the old.

Martin.

Reply to
mnetley

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.