I’d appreciate comments from any STW property law bods please.

Scenario…

— Person A owns a house worth £450k with an outstanding £180k mortgage.
— Person A is retiring and is no longer eligible for the mortgage, which will need to be repaid in a few months.
— Person B (family but not spouse), wants to help out by taking on the mortgage (well, a new one) whilst Person A continues to live there.
— House is to be either fully signed over or just Person B added to the deeds, depending on which is more beneficial tax-wise.

Question…are there any stamp duty implications in this transaction?

Cheers!

Bound to be, there’s a transfer of an interest in property.

Could A’s lawyer not answer this?

Actually I just phoned the Inland Revenue people about it and in fact there’s no stamp duty due at all unless the total of what Person B pays for the house (in this case, nothing) plus their half of the mortgage they’ll take on (in this case £90k) amounts to more than £125k (where stamp duty kicks in).

Very surprising, but good news in this case!

If the property is fully signed over there is stamp duty to pay for certain. I’m not sure in the second case, note I have been told if you go from 2 owners down to 1 there isn’t stamp duty to pay so perhaps you may be lucky

@pedalhead – why would you phone HMRC if you can ask on STW and have us all speculate wildly ! Good news for you indeed.

According to IR, stamp duty is only due on what you *pay for the property (which makes sense). If someone was to *give you a house, or you pay below the tax threshold for it, even if the house is worth a crap load more, you don’t pay any stamp duty. Of course, other taxes might be relevant (capital gains..?), but not stamp duty.

@pedalhead – why would you phone HMRC if you can ask on STW and have us all speculate wildly ! Good news for you indeed.

lol yes this way is much more fun. I’m not sure why I spoilt the surprise so early on 😀

pedalhead – not sure the advice you got was correct. The actual value of the property for mortgage purposes will still be £450K or so, in which case the property cannot be undersold without the risk of stamp duty being retrospectively levied on the real value rather than the free transfer.

Edit – there’s **potentially** (hard to say based on the info above) also an issue of beneficial interest if person A continues to live in the property – strictly speaking that could make person B subject to capital gains unless they live there before the property is sold on or disposed off via probate, and even if no rent is paid HMRC may decide that it’s effectively an informal rental arrangement with reservation of future benefit issues.

Quite a complex scenario and I’ll be watching the subsequent replies from more knowledgeable folk with interest.

Cheers robdixon. I’ve been trawling the govt blurb…

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm#4

Property given as a gift
If the property is received as a gift there’s no SDLT to pay, so long as there’s no outstanding mortgage on it. But if the person who receives the gift takes over some or all of an existing mortgage, then SDLT may be payable if the value of the mortgage is over the SDLT threshold.
Example
A husband decides to transfer a half share in a property he owns to his wife. She doesn’t make any cash payment for this share, but there is an outstanding mortgage on the property. The amount outstanding is more than the current threshold, so SDLT is payable. It’s payable even if the husband retains the mortgage. They’ll need to notify HMRC of the transaction.

I think this is the same as the advice I received on the phone earlier. Other possible implications that you mention, like capital gains etc, sound like they probably require a chat with a solicitor.

If it’s possible person A may want/need to go into a home in the future you might also want to check up on deprivation of assets. I don’t really know anything about it but have seen it discussed a fair bit lately.

Good info & worth noting, cheers.