Stamp Duty on Transfer of Property Between Spouses

• Stamp duty on transfer of property is payable on the chargeable consideration, including cash paid and mortgage debt taken on in exchange for the transfer.
• You usually do have to pay stamp duty on transfer of property between spouses unless there is no consideration and no change in mortgage liability; or, if the transfer is part of a divorce, dissolution, separation, or annulment.
• You may be able to avoid paying stamp duty if the person being added to the title pays nothing for the transfer and does not go on the outstanding mortgage.

Transferring half share of property to your spouse

The most common transfer between spouses happens when one owns their own home before marriage and wants to give half the property to their partner. After marriage or civil partnership, you transfer half the shares in the property to your partner, so you both own the marital home.

Stamp Duty might be payable depending on the property's value, whether the party receiving equity is a non-UK resident, or if it's an additional home.

This can be done very simply with a Transfer of Equity. The process generally involves a TR1 form, ID checks, and additional steps if a mortgage or leasehold is involved. By transferring half the property's shares, both partners become joint owners of the marital home.

How to transfer shares in property from husband to wife for tax efficiency

Couples who are joint tenants on a rental property may consider transferring a portion of their beneficial interest to their spouse in a lower income tax bracket.

Beneficial interest refers to the economic ownership of a property, as opposed to legal title, which is the formal ownership. By transferring beneficial interest, couples can effectively allocate rental income to the spouse in the lower tax bracket, reducing the overall tax liability.

You can do this through a deed of assignment, a transfer of equity, or a sale and purchase.

Is CGT payable on transfer of property to spouse?

While there's no Capital Gains Tax (CGT) to pay on property transfers between married couples, it's important to complete Form 17 for HMRC. This can be done through a severance of joint tenancy and a Deed of Trust or deed of assignment.

You can transfer up to 100% of the property to optimise tax efficiency. However, be aware that if you separate in the future, this is how the property will be divided up in the event of a divorce or dissolution.

Is there stamp duty on transfer of property between spouses?

Stamp duty land tax (SDLT) is payable on the "consideration" exchanged for transferring equity, which includes taking on mortgage debt. This means that if one spouse transfers equity to the other and the receiving spouse assumes a portion of the mortgage, SDLT may be payable.

If you transfer, for example, 50% of your property to your spouse and they also take on 50% of the outstanding mortgage, this can trigger an SDLT liability. The tax would be calculated based on the value of the share of the property that is being transferred.

It's important to note that the amount of SDLT payable depends on the current property value and any applicable exemptions or reliefs. Given the complexity of SDLT rules, it's advisable to seek professional advice and instruct a solicitor to ensure compliance and potentially minimise your tax liability.

Is there stamp duty on a second property for married couples?

Transfers of property between spouses or civil partners living together are exempt from the higher rate of stamp duty land tax (SDLT). However, if you jointly own the property with someone other than your spouse or civil partner, the higher rate of SDLT will apply to the transfer.

You may be eligible for a rebate on the additional rate of SDLT if you sell your previous property within 36 months of completing the transfer.

We explain the SDLT implications for couples (same-sex and opposite-sex) who want to transfer equity in a property to joint ownership, usually from a sole ownership structure.

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

Stamp duty land tax is payable on the total consideration being paid, which is set out within the Finance Act 2003, Schedule 4, Stamp duty land tax: chargeable consideration.

It even applies if no money changes hands; if one of the parties is released of their share of the mortgage debt. Being released from being liable for debt is a consideration.

Consideration can be cash changing hands or the taking on of a debt (such as a mortgage or personal loan). To work out the total consideration, you add the cash/money being paid for the share of the property being transferred and the new owner’s share of the existing mortgage/loan debt.

If the total consideration exceeds the stamp duty threshold, stamp duty is payable at the prevailing rate.

The payment (consideration) can take the form of cash, the giving of goods (giving a personal possession in exchange for the land/property), providing works or services (giving work or service in exchange for the land or property), release from a debt, transfer of a debt, including the balance of an outstanding mortgage.

For Example: Ian owns a property valued £300,000 with a £275,000 existing mortgage. Jane, Ian's wife, is transferred onto the legal title. Jane owns 99% of the beneficial interest, and Ian owns 1%, and Jane doesn't pay Ian any money for her share.

Stamp Duty Land Tax is payable on the consideration based on 99% of the existing debt of £275,000, which equates to £272,250 as she takes on 99% of the existing debt.

Need tax advice on your property transaction?

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