By Sarah Cookson, Director, Solicitor & Head of Conveyancing
Stamp Duty Land Tax and Transfers of Equity
On 15th February we reported on the upcoming changes to stamp duty for second properties. Announced by the Chancellor in his Autumn budget, the changes to stamp duty came into effect from 1st April 2016.
From 1st April 2016, if a person buys a second or subsequent property, then they are liable to pay a higher rate of stamp duty land tax, which is 3% above the usual rate, on any property transaction worth more than £40,000.
When is the new stamp duty rate payable?
The new stamp duty rate is payable where the person buying the property already owns, or has an interest in, another property and the ‘chargeable consideration’ for the transfer of the land is over £40,000.
The chargeable consideration is normally the money you pay for property or land, but it can also include taking on a debt (e.g. a mortgage) from another person or being released from a debt.
What does this mean?
The new stamp duty rates apply when a person buys a second or subsequent home. However, they also apply where property is transferred and the person acquiring the benefit of the property already owns a property.
This means the new rate doesn’t just apply to ‘Buy to Let’ purchases. It can apply to other property transactions, for example, where a person wishes to transfer the legal title of a property and stay on the title, and there is a chargeable consideration above £40,000.
Here’s a more detailed example:
- A married couple have two properties and want to transfer the legal title of one the properties into the sole name of Mrs.
- No actual money is exchanged, however, Mrs takes over the existing mortgage on the property in her sole name.
- The mortgage constitutes the chargeable consideration.
- Stamp duty would be payable by Mrs on half of the transferred outstanding debt, if this is above £40,000.
For more information, visit: https://www.gov.uk/stamp-duty-land-tax/land-and-property-transfers
Stamp duty can apply to a range of property transactions, even when money doesn’t change hands. If you are thinking of transferring an existing property speak to on of our Conveyancing experts on 0800 138 0458 or send us a message via our contact form below and we will call you back.
Disclaimer: The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice, and the law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice on their own particular circumstances.