When a couple divorce or separate, you may agree that a jointly owned property will be transferred into the sole name of one of you. This process is called a Transfer of Equity. If there is a mortgage on the property, you must first check with your mortgage provider that they agree to a Transfer of Equity.
Many people are not aware that stamp duty may be payable in a Transfer of Equity transaction and do not take this into consideration when deciding what is to happen with a jointly owned property.
When a married couple get divorced, or when civil partners dissolve the partnership, stamp duty land tax (SDLT) is not normally payable in a Transfer of Equity. This is because SDLT isn't payable if property is transferred to one or other of the couple as part of an agreement or court order which is part of divorce or dissolution proceedings. However, if no formal agreement or court order is obtained, SDLT may be payable.
The situation is different for unmarried couples who own property together. If you agree that one of you will take over ownership of a property you bought together, including any outstanding mortgage on the property, SDLT is payable by the person taking over ownership. The amount of SDLT they will have to pay will be based on any cash payment that the person taking over ownership makes to the other for their share of the property and the proportion of the outstanding mortgage that belongs to the share of the property being transferred.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
