Sharing your home with your new love can lead to a stamp duty bill.
Almost 70% of us now own our own homes so it's not surprising that there are a myriad of rules and regulations relating to buying and selling a house not to mention taxes.
Buyers will all know about the dreaded stamp duty that has to be paid on any property bought for more than £60,000. But you wouldn't expect to have to pay it again just because your partner was moving in with you and you wanted your home to be split so it was jointly owned, would you?
It's not an uncommon situation. Let's say you're a chap who owns a house which still has a mortgage on it. You meet someone, fall in love and your girlfriend moves in with you. As you have a future together, you decide that she will buy half your share of the house (which will enable the entire mortgage to be paid off) and you will put the house in joint names. The money is ultimately going into the same joint pot anyway, so it seems a logical way of doing it.
But this is exactly the situation of one Fool who was stunned to find that there was a stamp duty bill to be paid. As he'd already paid stamp duty when he'd first bought the property, as far as he was concerned he and his girlfriend were surely being asked to pay it twice.
Unfortunately, the Inland Revenue says that his girlfriend is 'buying' half of his property from him and taking on half of the mortgage debt so she is, therefore, liable for the appropriate amount of stamp duty.
Strangely, in this particular situation, she wouldn't have to pay stamp duty if there was no mortgage involved. So, in theory, she could simply pay off the mortgage as a gift to him and, at a later date, he could transfer half the house into her name as a gift to her. Hmmm.... I wonder if the Inland Revenue will wear that.
More on Stamp Duty.
