Property and stamp duty and capital gains tax

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Good morning to you.

Qu:  ‘Because 2 of my flats are valued at £160k each, will there be a stamp duty fee on the transfer, even though no actual cash is being given by my wife to me for this transfer?’

My reply:  Tax law: SDLT is payable if the consideration given (in your case is the value of the outstanding mortgages on both properties even though in your name only) is more than the current threshold of £125,000 in exchange for the transfer of the property.

Therefore in your particular case, compute the total value of the two outstanding mortgages and divide by 2 (each property will be jointly owned as a joint tenancy.)  If this totals more than £125,000 then stamp duty tax payable is the total consideration x the tax band (1% if below £160,000 with no marginal relief at the threshold.)

For example, if the mortgages total £160,000 then stamp duty tax payable is £160,000 x 1% = £1,600. If £125,000 or less than stamp duty tax is £nil.

I have approached a solicitor, and he will get back to me this afternoon on the costings.

He also indicated that all transactions will be completed in 3 – 4 weeks, but he cannot tell me when the land registry will update their records. Will it be a problem if they update after 5th April or is the title deeds based on the finalisation of the transaction.

My reply: The tax, if payable, is when the land transaction is completed (SDLTM7600) and not when the records are updated at HMRC.

If i get my wife on the title deeds on all the properties before 5th April, then the split takes effect for the whole financial year (ie 2011-12). Is this correct?

My reply: The split is for the entire tax year and so the capital gains tax exempt amount of £10,600  for 2011-12 is applicable for the whole year.

My regards,

Thanks,

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