Is Stamp Duty Payable on Transfer of Property Between Spouses?

Is stamp duty payable on of transfer of property between spouses? If you transfer property to your spouse or civil partner there is no specific stamp duty relief for the transfer unless you are separating or getting divorced. However, transfers for no consideration are exempt and transfers in connection with separation or divorce have a specific exemption from stamp duty on the transfer of property.

Stamp Duty Land Tax or SDLT is a tax on the acquisition of land in England and Northern Ireland. Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax, instead of SDLT.

SDLT is charged on land transactions in England and Northern Ireland according to the price paid or in some cases the market value. A land transaction is any acquisition of a chargeable interest. This includes not only freeholds and leases, but also interests, rights and powers over land other than exempt interests such as mortgages and licenses to use land. See further here.

If you’re looking for advice on SDLT in connection with a transfer of property between spouses, get in touch with Patrick Cannon, who can provide tax advice and representation in Stamp Duty Land Tax.

Can you reduce the stamp duty payable on a transfer of property between spouses?

If you make a gift of the property to your spouse and they do not take over liability for any mortgage on the property then stamp duty will be not be payable. Where there is a mortgage then very careful planning will be needed to ensure that the value of the mortgage debt is not treated as consideration payable and stamp duty charged on the value of the debt.

Is the second home stamp duty payable on a transfer of property between spouses?

There is a specific exemption from the 3% additional rates for transfers between spouses and civil partners. See here.

What are the stamp duty rules for a transfer of equity?

The transfer of the equity in a property between spouses follows the same rules as explained above under “Can you reduce the stamp duty payable on a transfer of property between spouses?” Unless a lease is involved, the ownership of the legal registered title is ignored for stamp duty and the charge concentrates on the movement of the underlying economic or “beneficial” interest in the property.

What stamp duty is payable when transferring an interest in a jointly owned property?

The transfer by one spouse to the other of their share in the equity will not attract stamp duty if it is by way of gift and there is no mortgage debt being assumed by the receiving spouse. If the transfer is in connection with a separation or divorce, then a specific stamp duty exemption may be available. Careful planning and structuring of the arrangements to ensure that stamp duty does not arise may be required. HMRC have published this helpful example of how the rules have operated since November 2017:

“Mr I is transferring 50% of a buy-to-let property that he owns to his wife, Mrs I. Mrs I is paying some cash and taking over responsibility for half the mortgage debt. Mrs I owns no other residential property but Mr I owns a number of other buy-to-let properties.

For transfers before 22 November 2017, the higher rates will apply to the transfer as Mr I owns other residential properties. As a married couple other residential property owned by either spouse is taken in account in determining whether the higher rates apply.

For transfers on and after 22 November 2017, the higher rates will not apply as a transfer between spouses is disregarded as above.”

Do you pay CGT on divorce settlements?

A property can be transferred from one spouse to another free of any capital gains tax unless they are separated. Patrick has written a more comprehensive guide to capital gains on a divorce settlement, you can learn more here

How can Patrick Cannon help?

Patrick can advise on whether a transfer between spouses could be liable to stamp duty and if so, how the stamp duty charge could be avoided. Patrick can give you or your professional advisers advice on the stamp duty, capital gains tax and other tax liabilities of what is planned and whether any reliefs or exemptions from tax can be claimed. Contact Patrick today if you would like his help.