Persuade your ex to help you out of a stamp duty trap

Our lawyer, Fiona McNulty, advises on the issue of stamp duty
legal cartoon
© Merrily Harpur
Question: My girlfriend and I have just broken up and have agreed that I will buy her half of our house. It’s worth about £260,000 and we are pretty much mortgaged up to the hilt. It would be a struggle but I could just about manage to take over the mortgage. However, my solicitor says I will have to pay stamp duty on top of everything else, which really makes the deal unworkable. Is my solicitor right?

Answer: Stamp duty land tax is a tax on the purchase of land. It is potentially payable every time you buy property, whether you take out a mortgage or not.The amount of tax depends on the value of the property. At present, there is no duty payable on purchases up to £125,000.

Above £125,000 the rate is one per cent and this gradually increases to five per cent for property purchases of £1million or more. It appears you propose buying 50 per cent of the property for £130,000, which will be caught by the one per cent rate.

As with most taxes there are some exemptions, including purchases between husbands and wives, but this exemption does not apply to unmarried couples. So your solicitor is right.

If you and your girlfriend can’t agree on the house’s value, hire a valuer because it could be that the property is not worth quite as much as you think.

What's your problem?


If you have a question for Fiona McNulty, email legalsolutions@standard.co.uk. We regret that questions cannot be answered individually.

Fiona is a partner in the residential real estate team at Thring LLP www.thrings.com.

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