I understand that the 3% rate of SDLT for second residential properties applies as if a property owned by one spouse is owned by both spouses jointly. Therefore if a husband owns their residence in his sole name, the wife is treated as jointly owning it too.
This presumably means that if the husband also owns a buy to let, and transfers half to his wife subject to a half share of a £250,000 mortgage, the wife would have to pay the 3% rate of SDLT. Do members agree?
I agree with Simon’s analysis. Moreover, if the buy to let had a mortgage of only £100,000 presumably the surcharge would apply on the transfer of half the mortgage liability (namely £50,000). Therefore the only way to avoid the stamp duty is to transfer without the mortgage liability,(or to restrict the transfer up to £40,000.) It would therefore follow that the interest element of the mortgage liability would have to be set of entirely against (in this case) the husband’s half share of the income.
I Will Solicitors Ltd
If H solely owns P1 (sole residence) and P2 (buy to let) and H gifts say a 50% interest in P2 to W, under Sch 4ZA para 9(2) the transaction is a higher rates transaction IF had H been the purchaser of that 50% the transaction would have been a higher rates transaction (which it would have been).
Hence, the higher 3% charge in principle applies.
However, if H agrees to indemnify W against liability upon the mortgage no SDLT charge arises.