What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax charged by the government when you buy 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 pay depends on which price band the transaction falls into.
Different rates apply in Scotland and Wales than in England and Northern Ireland.
How much Stamp Duty do I pay?
As of 23 September 2022, the rates in England and Northern Ireland for SDLT transfers are:
- Up to £250,000: 0%
- £250,001 to £925,000: 5%
- £925,001 to £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% of the mortgage, this totals £400,000. The Stamp Duty you pay would be calculated like this:
- 0% on the first £250,000 = £0
- 5% on the remaining £150,000 = £7,500
The amount of Stamp Duty may also change depending on your other assets, such as whether you own a second home.
Who is responsible for paying Stamp Duty?
You only pay SDLT if you are the person taking on the transferred equity and/or mortgage.
If you are the one being removed from 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 after a divorce, with or without a court order, and both names were on the title deed and mortgage, you will not have to pay Stamp Duty.
In all other cases, if the equity or 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 when transferring ownership to a child, sibling or anyone else who is not a partner.
Your conveyancing solicitor can advise you on whether Capital Gains Tax applies.
What other costs are involved in transfer of equity?
There are other costs involved in a transfer of equity, such as conveyancing solicitor fees and mortgage lender fees.
Read more about transfer of equity costs.