What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax that is charged by the government when you are buying a property over £250,000 in England or Northern Ireland.
Do I pay Stamp Duty on equity transfer?
Just like when buying a property, you will have to pay SDLT if the equity or mortgage you are taking on is worth over £250,000.
The amount of stamp duty you will then pay depends on what price band the transaction falls in.
Different rates apply to Scotland and Wales than in England and Northern Ireland.
How much Stamp Duty do I pay?
As of 23rd September 2022, the rates in England and Northern Ireland for SDLT transfers are:
|
Purchase price bands (£) |
Percentage rate (%) |
|---|---|
|
Up to 250,000 |
0% |
|
250,001 - 925,000 |
5% |
|
925,001-1.5 million |
10% |
| Above 1.5 million | 12% |
For example, a property may have equity of £600,000 and a mortgage of £200,000. If you take on 50% of the equity and 50% the mortgage, this will total to £400,000. The Stamp Duty you'll pay will be calculated like this:
- • 0% on the first £250,000 = £0
- • 5% on the remaining £150,000 = £7,500
The amount of Stamp Duty will also change depending on your other assets, for example if you have a second home.
Who is responsible for paying Stamp Duty?
You only pay SDLT if you are the person being transferred equity and/or the mortgage.
If you are the one being taken off the title deeds, you do not have to pay the tax.
Can I avoid paying Stamp Duty when transferring property?
If you are splitting a jointly owned property in a divorce (with or without a court order to do so), and both your names were on the title deed and mortgage, you will not have to pay Stamp Duty.
In all other cases, if the equity/mortgage is over £250,000, SDLT must be paid.
Do I need to pay tax on transfer of equity?
In some cases, you may need to pay Capital Gains Tax as well as SDLT on the property, such as if you are transferring to your child, sibling or anyone else who is not a partner.
You’re conveyancing solicitor can advise you on whether you need to pay Capital Gains Tax.
What other costs are involved in transfer of equity?
There will be other costs involved in transfer of equity, such as conveyancing solicitor fees and mortgage lender fees.
Read more about transfer of equity costs.