Will I have to pay Stamp Duty Land Tax when transferring my property deeds after a divorce or separation?

Will I have to pay Stamp Duty Land Tax on transferring my property deeds? It’s much the same as when a property is purchased from the previous owner when you transfer your property deed, SDLT needs to be considered.

We need to look at what the ‘consideration’ for the transfer is. The consideration is anything of monetary value that is provided to the owner of the property to effect that transfer. For example, this may be cash, the repayment of the mortgage, credit cards, etc.

SDLT is calculated on the total consideration for the transfer.

We then have to work out if the standard SDLT rates apply or if the 3% surcharge may apply. This will depend on whether the person or people staying on the title to the property also own any other property.

If the consideration for the transfer is over £40,000 but no SDLT is payable, HMRC still needs to be notified of the transaction. This is something Attwells would take care of for you.

Will I have to pay Stamp Duty Land Tax on transferring my property deeds? – Here is an example

To give you an idea of how this works, we have set out an example below;

Ms. A and Mr. B have lived together for 15 years although they are not married or in a civil partnership. They are separating and wish to deal with the division of their home. The property has been valued at £300,000 and they have an outstanding mortgage of £50,000 on the property.

Ms. A has decided to stay in the property and buy Mr. B out of the property.

The equity in the property (the value less the outstanding debt) is £250,000, therefore Ms. A will pay Mr. B half of this, i.e., £125,000.

Ms. A will be getting the consent of the existing lender to remove Mr. B from his obligations under the mortgage and therefore she will take over Mr. B’s half of the outstanding mortgage, i.e., £25,000.

The consideration Ms. A is paying is therefore the cash that is changing hands (£125,000) plus half of the existing mortgage debt (£25,000,) totalling £150,000.

The transfer of title is completed on the 30^{th of} June 2019 and based on the rates for SDLT that applied on that date, Ms. A will be liable for SDLT of £500.  This assumes that she does not own any other property and is not subject to higher rates of SDLT. 

Our FAQ and articles are correct at the time of writing.

These have been created for marketing purposes only and should not be considered as legal advice.