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Stamp duty

by zia165 04 May 2012 |

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Hi, my husband and I are both on the title of our property for 2 years now. the equity is all mine from before we got married and our house before this one was in my sole name. We now want to revert back to me owning the property alone due to separation. No money is changing hands as he never owned any equity in the property and we have an interest only mortgage so no further equity accumulated during the past 2 years. the mortgage is £400k and now I am told that I need to pay the inland revenue 1% of half the mortgage debt which is £2k - this is a lot of money to pay for taking on more debt! seems totally counter intuitive... my questions are: is there a way to be exempt from the stamp duty based on the facts above? why do I have to pay stamp duty for taking on more debt?also, is the rule the same upon divorce?
Many thanks for any insight you could offer,

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879

MikeGG1 posted
Before getting down to the technicalities of the transfer, have you checked with your mortgage provider as to whether they will allow you to have all the mortgage?

Their criteria are much tighter these days than they used to be.

There would only be your income to support the mortgage rather than the joint income which there was previously.

There is also the question as to whether they would permit an Interest-only mortgage without a repayment scheme. Most are now requiring that investment vehicle.

Mike
Posted on 04 May 2012 | Love 0 loves Report
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zia165 posted
yes I can take it all myself and it's interest only :-)
Posted on 04 May 2012 | Love 0 loves Report
879

MikeGG1 posted
http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm#2

It would need to be a legal separation or divorce in order to avoid SDLT.

Mike
Posted on 04 May 2012 | Love 0 loves Report
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JoeEasedale posted
Probably nothing to do with your situation, but if your husband goes bankrupt after being taken off the deeds, then the official receiver, following case law, may well reverse that, and seek half the equity.

On another matter, lenders are starting to ban interest only mortgages all together - the co-op has already done so. Provided you have a repayment scenario in mind, then all well and good, if you can get such a loan, but otherwise it may be wise to consider a repayment loan.
Posted on 05 May 2012 | Love 0 loves Report
879

MikeGG1 posted
Joe refers to the situation where the transfer is done as a deliberate Deprivation of Capital ahead of bankruptcy.

If your separation/divorce was legally done and there wasn't any prospect of bankruptcy at the time then there wouldn't be a problem if it happened later.

Mike
Posted on 05 May 2012 | Love 0 loves Report
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zia165 posted
Many thanks guys, really helpful! seems like I have to pay it as the separation is not legal yet. Good point about bankruptcy although this is not a prospect now so I think we're good.
Posted on 06 May 2012 | Love 0 loves Report
879

MikeGG1 posted
I wouldn't rush into the transfer if there is a prospect of a legal split or of getting back together.
Posted on 07 May 2012 | Love 0 loves Report

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