What is the stamp duty on a gifted property?
- Stamp Duty is payable on the consideration unless it is a gift to a company.
- Consideration is money changing hands or a debt taken on.
- When you gift a property, there is no consideration, so there is no stamp duty.
- If the transaction does have consideration, you must file a SDLT return to HMRC and pay any tax due within 14 days.
- You have a normal rate of Stamp Duty, Additional Rate, and Non-UK resident.
- You can draft a deed of gift to transfer property to anyone, and the cost of a deed starts from £200.00 EXC VAT.
- Whilst a gift may not attract Stamp Duty, there may be other taxes such as Inheritance Tax (7-year rule and gift with a reservation of benefit rules (GROB)), or Capital Gains Tax.
You can gift a property to anyone other than a company, and there is no stamp duty land tax to pay. The most commonly gifted transactions include:
- Parents gifting property to their child.
- Husband gifting property his spouse.
- Gift between brothers.
- Inheritited property
You can draft a deed of gift to transfer property to anyone, and the cost of a deed starts from £200.00 EXC VAT.
- Get up-to-date property tax advice on SDLT.
- Free 15-minute initial consultation with a qualified accountant from our panel of tax advisors.
- Ask your tax questions and get guidance on what you can do next.
- If there is some further accountancy work required, then you'll be quoted for this as a separate piece of work with no obligation to purchase.
What is the stamp duty on a gifted property?
Legislation states you pay the applicable rate of stamp duty on the money changing hands. For most transfers of land/property, this is the amount stated in the contract or the TR1. For a gift the amount stated will be £0, and as such, no stamp duty is payable.
Under section 1 of Schedule 4 Stamp duty land tax: chargeable consideration, it states:
The chargeable consideration for a transaction is, except as otherwise expressly provided, any consideration in money or money’s worth given for the subject-matter of the transaction, directly or indirectly, by the purchaser or a person connected with him.
- Transfer of equity
- Deed of gift such as a deed of trust or deed of assignment
- Sale and purchase
We can handle all of the above transactions and charge a fixed fee for fast completions. Call us on 0333 344 3234.
Read more - 4 Ways to gift a property to family or your spouse.
What are some examples of stamp duty on a gifted property?
Gift from mother to son Stamp Duty
Mum owns a property in her sole name. There is no mortgage on the property. The property is worth £500,000, but she gifts the property to her son.
There is no consideration, so there is no Stamp Duty to pay.
Gift from father to son Stamp Duty
The rules are the same for a dad as much as a mum. If there is no consideration, so there is no Stamp Duty to pay.
Gift between brothers Stamp Duty
Muhammed and Ahmed are brothers, live together and own a property in joint names. There is no mortgage on the property. The property is worth £500,000, and Ahmed wants to gift his share to his brother.
There is no consideration, so there is no Stamp Duty to pay.
Gift between brothers where there is a mortgage
Muhammed and Ahmed are brothers, live together and own a property in joint names. There is a mortgage on the property of £250,000, and they own the beneficial interest at 50:50. The property is worth £500,000, and Ahmed wants to gift his share to his brother.
Even though no money changes hands, half of the mortgage is consideration because Ahmed owns 50%. A stamp duty land tax form must be filed, and the stamp duty must be paid within 14 days. The amount of stamp duty may be nothing based on the current tax bands. Use our Online Stamp Duty Calculator.
What if the gifted property is your home?
You can gift a property that is your home for no stamp duty as long as there is no consideration. For example, it isn't in return for free rent, live-in care or another benefit in kind.
Whilst the 7-year IHT rule is well known, there is also the gift with a reservation of benefit rules (GROB) rule. If you gift a property you continue living in, you retain a benefit. The property's value will fall under your inheritance tax in these circumstances. These are complicated rules, and specialist tax advice should be taken.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
