Adding name to mortgage/deeds - need to pay stamp duty??

[StampDutyMadness]

Name changed

Just as title really.

Didn’t add my name to mortgage as DHs credit rating was better than mine so we could get a better rate under his name only. Solicitors told us on day of completion my name couldn’t go on deeds without being on the mortgage too. Had our belongings in a lorry and new tenants due to move in to our rental so we were stuck. DH paid stamp duty.

Now going through process of adding my name to deeds, have contacted the bank (new bank, we changed bank when our fixed rate ended) to start the process of adding my name to mortgage but been told by solicitors we have to pay stamp duty again.
Previous solicitors have been taken over by a bigger company so we have approached a few different ones for quotes. Two started off by saying they didn’t think stamp duty was involved but now all say because DH is involved in the transaction stamp duty applies.

Is this correct that he has to pay stamp duty twice on the same property? I don’t understand how this is can be as I’ve never owned property.

I know it has no bearing on the legality of things but we’ve had a stressful year (health, work, kids, parents) and were looking forward to a cheap holiday but can’t do that if we have to pay this stamp duty. It isn’t the end of the world I know, just very annoying when it doesn’t even make sense.

Stamp duty is due if it's a transfer of equity. If DH was adding you to the deeds in return for cash, you'd be buying equity from him and stamp duty would be due if it was over the threshold. I recently bought my ex husband out of our joint property but no stamp duty due because the value of the transfer was below £250k.

If you're being added and no money is changing hands, he's essentially gifting you a share of equity. No stamp duty is due for gifted equity.

And others are correct that the mortgage must match ownership. I wanted to get a new mortgage in my name and do the TOE as part of the divorce. Bank said no, because it meant another person had a claim to the property. If I defaulted on the mortgage they couldn't take full possession because ex still owned half.

I'd be specific to the solicitors that DH is gifting 50% of the equity to you as part of the transfer, no money is changing hands.

To help you understand how it works - stamp duty is a tax paid on the ‘consideration’ paid for a property. If he makes you a gift, no consideration and therefore no stamp duty. But if you ‘take on’ half the mortgage, you are essentially paying something because you are taking on some of the debt and that has a value. So the value of the ‘consideration’ is the value of the share of the debt you take on and this value is subject to stamp duty.

Thank you, I think I’m getting my head around it now. What I don’t understand is why I need to pay stamp duty when 50% of the remaining mortgage is below the threshold? Could the solicitors calculations be based on the full mortgage?

Yes I think so. Was a number of years ago and I can’t actually remember the exact details, but now I’ve read the other posts I realise it wouldn’t have met the stamp duty threshold anyway

Thank you. I understand the deeds/mortgage situation.

So most SAHPs are not on deeds or have very high earning partners?

Thanks could try this too but seems if I’m going on the mortgage it can’t be a gift?

PP have mentioned equity and I’m getting confused again 😅

Equity is just the amount of house value not covered by the mortgage. Eg, if your house is worth £500K and you have a mortgage of £450K, the equity would be £50K.

@StampDutyMadness equity is the bit of the house you own outright ie value of the house less the remaining mortgage.

Say house has been valued at £400k, and your mortgage is £300k, the equity is £100k.

At the moment, your DH owns all of that £100k. If you were to split, you'd be entitled to nothing. By adding you to the deeds, he's gifting you 50% of the equity, so you each own £50k.

OK, so if you're taking on half of the remaining mortgage, that's the "chargeable consideration" and stamp duty is due if it's above the threshold.

No money is changing hands for the equity, so no chargeable consideration on that.

If your share of the mortgage is under £250k then the stamp duty is £0. And if it's above £250k, stamp duty is only due on the part above £250k.

Ask your solicitor about a declaration of trust confirming that the equity in the property is held for both of you 50:50. This wouldn’t mean changing the deeds/ mortgage.

That’s not correct. In a divorce, all assets and debts are included in a financial settlement regardless as to who's name they are in.

We bought our house in DH's name only as he'd sold his previous property, but my sale still hadn't gone through. When he was due to remortgage I was added - I had to pay stamp duty on 50% of the value. At that time it was under the threshold, so luckily there was nothing to pay.

This
And while technically the title to the property and the security can be in different names the Banks do not allow this

It's a muddle and depends on how much is left on the mortgage and how much of it you are taking on (ie the consideration) and might also depend on whether you own other property. The bank will want a solicitor to deal with it either way so they should advise you.

If your share of the mortgage is under £250k then the stamp duty is £0. And if it's above £250k, stamp duty is only due on the part above £250k.

From 1 April the SDLT-free threshold reduces to £125k.

But you are taking on half of the mortgage though. Consideration

The reason solicitors only contacted dh is because he was the only buyer/ owner. Lender would be pretty pissy if an occupier didnt sign a consent deed. If he instructed them you are not their client ( the solicitors )

Thank you so much everyone for trying to help.

Just spoke the DH again and it seems that the new SD threshold that’s the issue: the consideration will be above the new threshold because although I’ve never owned property he has bought (and sold) another house in the past. So I lose the first time buyer discount because he’s involved in this transaction.

Still seems madness to me and not what the gov link says….

You’d think that the threshold applies to the status of the spouse, not the owner….

He’s going to speak with the bank anyway although that will likely be a dead end!

tried to post a photo earlier but no luck.

The bank have literally zero to do with sdlt. Thats a you problem not a bank problem

When I moved in with my partner to a flat he owned I paid stamp duty on half of it when he added me to deeds / mortgage. Even though he had already paid stamp duty.

The property will be held in joint names so it’s not the status of one party - it’s if either party has ever held property before.

sorry to sound bleak but if you’re just looking at this now I doubt you’ll find a solicitor to complete the work within six working days (which is the deadline to the sdlt threshold changing).