Gifts and Stamp Duty

Gifts and Stamp Duty

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I have a client who wishes to transfer four properties to his son.

As the transactions will be linked for stamp duty purposes, I have been thinking of gifting the properties to avoid this.

Given that is a transaction between connected persons will this work? Or does market value have to be used for stamp duty purposes as well as CGT?

Many thanks

Jane
Jane Buckley

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By Sweet Legal
06th Mar 2006 13:05

SDLT liabilty is based on actual consideration
I assume that the property which is being transferred comprises land and/or bulidings. If that is the case there is potentially a charge to stamp duty land tax. However, where a property is transferred to an individual the charge to SDLT only arises if the acquirer is providing actual consideration, in which event the charge will be a percentage of the consideration.

"Consideration" for SDLT is widely defined (see Schedule 4 to FA 2003) and includes assumption of liabilties. Hence, if any of the properties are mortgaged and the properties are being transferred subject to the mortgage, such that the son will be assuming liabilty under the mortgage, the amount of the liabilty assumed by the son will be chargeable consideration for SDLT.

If the son is providing consideration, it is very likely that the transfer of the four properties will be "linked" for SDLT, so that the rate of charge will be computed by reference to the aggregate of the consideration being provided for all four properties (see s108 FA 2003).

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