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Transferring Property And The Stamp Duty Land Tax Trap

It's easy to fall into, but equally avoidable ...



A husband and wife are exempt from Capital Gains Tax when transferring income-producing assets. However, when it comes to property, you could be caught out by the Stamp Duty Land Tax trap ...

Don't fall into the Stamp Duty Land Tax trap when transferring property!

Don't fall into the Stamp Duty Land Tax trap when transferring property!

copyright: racorn / 123rf stock photo

Firstly, I have to say that this only works for a husband and wife that are living together and there's no hint of a separation or divorce on the horizon. The transfer of the income-producing asset is deemed to have happened at such a value as gives rise to neither a gain nor a loss.

"This is a great idea where the asset can be transferred from a high tax paying spouse to a low (or non) tax paying one!"

But when it comes to transferring property, there is a trap that is easy to fall into if you're not careful. It's called the Stamp Duty Land Tax trap, or SDLT tax trap for short.

If the transfer of the property is a genuine gift, and there's no financial consideration involved, then it is exempt from the trap. However, if one spouse is taking over the debt or other obligation on the property, such as a mortgage, then it isn't.

There is a threshold for SDLT (for second properties) of £40,000, so paying off any mortgage or other liability on the property before the transfer would be hugely beneficial. You could always refinance later on if required.

Remember there are different rules if you're running a property business, but for two spouses who want to move assets such as property between them, it's always beneficial to talk to a tax adviser such as myself first.

"Would you like to know more?"

If you don't want to be caught out by the Stamp Duty Land Tax trap then do give me a call on 01908 774323 or click here to ping me an email and let's see how I can help you.

Until next time ...


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More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.