Marriages, divorce, and civil partnership

Contents

Q. We are getting married / entering into a civil partnership / setting up home together and want to transfer one partner’s property into our joint names

A. There is no SDLT relief for transactions in connection with marriage or entering into a civil partnership.

SDLT is charged where an interest in land is transferred for consideration. Consideration will include

  • any cash payment and
  • any assumption of liability to pay a mortgage. The liability assumed is taken to be a proportion of the outstanding mortgage corresponding to the proportion of the share of the property which is acquired.

Example

A house is valued at £180,000. The transferring partner has equity of £90,000 and there is an outstanding mortgage of £90,000.

The transferee partner pays a cash sum equivalent to half the equity and acquires a 50% share in the property.

The consideration in this case will be the cash payment (£45,000) plus 50% of the outstanding mortgage (£45,000) = £90,000. As this is below the stamp duty land tax threshold of £125,000 there will be no tax to pay.

Although there is no tax to pay, details of the transaction must be returned in a land transaction return.

(Note: for this purpose joint tenants are treated as each owning a 50% share in the property.)

Q. We are divorcing / dissolving a civil partnership / splitting up and want to transfer a property from our joint names into the sole ownership of one partner

A. A transaction of this kind will be exempt from SDLT if it is effected in pursuance of a court order or an agreement between the parties in connection with divorce, nullity of marriage or judicial separation, or the dissolution of a civil partnership (Schedule 3 Finance Act 2003).

In this case the transaction can be self-certified to the Land Registry using form SDLT 60 and no land transaction return is needed.

Otherwise, SDLT will be charged, based on the consideration given for the transfer including

  • any cash payment and
  • any assumption of liability to pay a mortgage. The liability assumed is taken to be a proportion of the outstanding mortgage corresponding to the proportion of the share of the property which is acquired.

Example

A house is valued at £350,000. The partners have equity of £250,000 and there is an outstanding mortgage of £100,000.

The transferee partner pays a cash sum equivalent to 50% of the equity and acquires sole ownership of the property.

The consideration in this case will be the cash payment (£125,000) plus 50% of the outstanding mortgage (£50,000) = £175,000. This is above the stamp duty land tax threshold of £125,000 and the tax due on the consideration at 1% will be £1,750.

Details of the transaction must be returned in a land transaction return in the usual way.