Do I pay Stamp Duty Land Tax (SDLT) on a transfer of equity?

Depending on the circumstances, Stamp Duty Land Tax (SDLT) may be payable when transferring equity in a property or land. We explain when Stamp Duty will be payable and and how it is calculated.

What is a transfer of equity?

A 'transfer of equity' is when an existing owner of a property (or land) adds or removes one or more people to the title (ownership) of the property, or transfers full ownership of the property to another person.

Examples of when you might transfer equity include:

• Selling your share in a property
• Buying out an ex-partner
• Buying out a joint owner
• Adding a new partner or spouse to the title of your property
• Gifting a property (or share in a property) to a child
• Inheritance Tax (IHT) planning.

What is Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax (SDLT) is a tax payable to HMRC on property and land purchases.

Unless you are an eligible first-time buyer, you pay SDLT when you buy a residential property in England or Northern Ireland for more than the current threshold of £125,000.

(In Scotland, you pay Land and Buildings Transaction Tax (LBTT), and in Wales you pay Land Transaction Tax (LTT).)

Is Stamp Duty payable when transferring equity in a property or land*

Stamp Duty may be payable, depending on the circumstances:

Sce: https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-propertyy

Table applies to property equity transfers in England only.

*As with all tax matters, SDLT can be complicated. You should speak to a conveyancing solicitor to confirm your position with respect to SDLT.

Is Stamp Duty payable on the transfer of property between family members?

If the equity in the property (or the whole property), is being gifted from one family member to another (e.g. a child, spouse, civil partner or sibling), there would be no consideration and SDLT would not usually be payable.

How is Stamp Duty calculated on a transfer of equity?

When transferring equity held in property or land, SDLT is payable on the 'chargeable consideration'.

When buying a property, chargeable consideration is the amount of money a buyer pays for the property.

However, when equity in a property or land is transferred from one person to another, chargeable consideration is calculated as follows:

The amount of debt transferred or taken on (the mortgage) plus the amount of cash being paid for the share of the equity.

Example:

David owns a property worth £600,000 and is mortgage-free.

David and Sheila get married and David gives 50% ownership of the property to Sheila. As there is no mortgage, there is no 'chargeable consideration' and therefore no SDLT is payable.

However, if in the above example, David has an outstanding mortgage of £400,000, Sheila will have to pay SDLT on £200,000 (£400,000/2 = £200,000) - this being the 'Chargeable Consideration'.

If, in addition to the outstanding mortgage of £400,000, Sheila pays David

Is the Stamp Duty threshold the same on an equity transfer?

Yes. SDLT will only be payable if the chargeable consideration exceeds the minimum threshold of £125,000. If the transfer of equity is in a second property (e.g. a buy-to-let), the minimum threshold is £40,000.

How much Stamp Duty will I have to pay on a transfer of equity?

The current SDLT rates are:

*If equity is being transferred in a buy-to-let or second property, an additional 3% stamp duty must be paid on all the relevant bands if the chargeable consideration is more than £40,000.

Your next step

Whether you are gifting a property to a child, getting married or separating, or transferring equity for any other reason, we can help you find an expert conveyancing solicitor. Even if you are just looking for advice, we can help.

If you are also planning to remortgage as part of the transfer process, the remortgage legal work can be completed at the same time as your transfer of equity.

• Transfer of equity experts
• No Completion, No Fee Guarantee
• CQS-accredited panel solicitors
• Fixed fees - All-inclusive Quote

Transfer of Equity
Stamp Duty Calculator

Is the property in England or Wales? Please select England Wales Somewhere else

What are the circumstances of the equity transfer? Please select Divorce, legal separation or ending a civil partnership Receiving property or a share of a property in a will Transferring to or from company All other transfers of equity

Is a share of the property or the whole property being transferred? Please select A share of the property The whole property

Does the person receiving the equity already own part of the property? Please select Yes No

Is anything being paid for the equity? Please select Yes No

How much is being paid?

Is there a mortgage on the property? Please select Yes No

Will the new joint owner be sharing responsibility to pay the mortgage? Please select Yes No

How much of the existing mortgage debt is the new owner taking responsibility for?

Is the person receiving the equity a UK resident? Please select Yes No

Has the person receiving the equity ever owned a property or a share of a property before? Please select No Yes

Will the property be the main residence of the person receiving the equity? Please select Yes No

Disclaimer

Quittance Legal Services does not provide tax or accounting advice. This article is provided for informational purposes only and should not be relied on for, tax or accounting advice. You should consult with your own tax and accounting advisors.