What are the SDLT consequences of a transfer at less than market value?

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“What are the SDLT consequences of a transfer at less than market value? Mother owns property, no mortgage – value £300,000.  Mother wants to transfer property to son (his first home) – purchase price declared to lender £194,500, amount of mortgage £90,000.  Lender is aware of the element of gift.

The purchase price in the transfer will have to be expressed as £194,500 to avoid the 100% mortgage situation.

1. Should the ‘consideration’ section of the TR1 make it clear that of the £194,500 purchase price, £90,000 is money to be paid over and the balance is a gift?

2. Will the SDLT be chargeable on £90,000 or £194,500?”

Source: BLG Member

 

If the consideration is in fact £194,500 SDLT will be chargeable on that even if part of it is not paid.

I would be alarmed to see a figure in the consideration section of the TR1 which was incorrect even with the explanation you suggest. The information is shared with HMRC.

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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