What are the SDLT consequences of a transfer of equity?
“I am currently acting in a transfer of equity, the property is currently jointly owned by my client and his ex-wife with a mortgage secured on the title. This is a matrimonial split and under the terms of the Court Order the property is to be transferred to my client with a lump sum payment of approximately £60,000 going to the ex-wife. My client now has a new partner and she is party to the transfer so on completion she will become joint owner with my client, the existing mortgage is also being transferred with the ex-wife’s name being removed and the new partner’s name being added.
I know that part of the transaction is exempt from SDLT as the transfer of the ex-wife’s name and payment of £60k is part of the Court Order however what I’m not sure on is whether the new partner has to pay duty for the share of the property she is taking on and her assuming part of the mortgage debt?”
Source: BLG Member
It seems to me that the client’s new partner is acquiring a chargeable interest in the property in consideration of the assumption of a proportion of the mortgage debt. Where property is held in undivided shares the amount of secured debt treated as assumed is determined on the basis that the proportion of the amount owed by a person corresponds to the share that they own in the property subject to the debt. For this purpose joint tenants are treated as owning the property in equal shares.
At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.
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