Market value and consideration are different
A transfer of equity changes who owns an interest in a property. SDLT generally looks at chargeable consideration, which can include cash and an assumed share of mortgage debt. The property’s full open-market value is not automatically the amount entered into a standard purchase calculator.
A transfer described as a gift can still involve consideration if the recipient takes responsibility for debt. Conversely, a genuine transfer for no consideration can be treated differently. The legal and financing arrangements matter more than the label attached to the transaction.
An illustration involving cash and debt
Suppose an owner receives £50,000 and the recipient also takes over £100,000 of mortgage debt attributable to the transferred interest. The potential consideration to assess is £150,000, not just the £50,000 cash payment.
This is an explanation of what to identify, not a conclusion about the final SDLT. Reliefs, exemptions, higher-rate rules, joint ownership and the reason for the transfer can change the result.
Relationship changes need their own assessment
Transfers connected with divorce or dissolution of a civil partnership can qualify for specific treatment. An ordinary transfer between spouses or an unmarried couple is not automatically equivalent to a transfer made under qualifying divorce arrangements.
Ask the conveyancer which legal provision applies to the actual document being signed. Keep any relevant agreement, court order, mortgage statement and ownership percentages together for the assessment.
Before using a calculator
Establish the interest being transferred, cash changing hands, relevant debt, interests retained and other properties owned by the parties. Check whether any transactions are linked. Only then can the applicable tax rules and consideration be determined.
Our residential purchase calculators do not determine transfer-of-equity eligibility or consideration. Use the official guidance and a transaction-specific calculation. Scotland and Wales have separate rules for LBTT and LTT transfers.
RESEARCH & CORRECTIONS
Sources and review
Researched and maintained by StampDutyCal. Checked on against the official sources below. This is our own research, not an independent professional tax review. We update the website when rules change.