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?

Simon Northcott

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.

Haroon Rashid
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.

Malcolm Finney