When a couple divorce or separate, you may agree that a jointly owned property will be transferred into the sole name of one of you. This process is called a Transfer of Equity. If there is a mortgage on the property, you must first check with your mortgage provider that they agree to a Transfer of Equity. Many people are not aware that stamp duty may be payable in a Transfer of Equity transaction and do not take this into consideration when deciding what is to happen with a jointly owned property.
Transfer of Equity
When a married couple get divorced, or when civil partners dissolve the partnership, stamp duty land tax (SDLT) is not normally payable in a Transfer of Equity. This is because stamp duty isn’t payable if property is transferred to one or other of the couple as part of an agreement or court order which is part of divorce or dissolution proceedings. However, if no formal agreement or court order is obtained, stamp duty may be payable.
The situation is different for unmarried couples who own property together. If you agree that one of you will take over ownership of a property you bought together, including any outstanding mortgage on the property, stamp duty is payable by the person taking over ownership. The amount of stamp duty they will have to pay will be based on any cash payment that the person taking over ownership makes to the other for their share of the property and the proportion of the outstanding mortgage that belongs to the share of the property being transferred.
If you would like advice about stamp duty and transferring ownership of a property upon separation, whether you are married or unmarried, please contact our enquiries team on 01473 229 200.