Is Stamp Duty Land Tax payable on a gift? What to do if you’re gifted a house

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Currently, the SDLT threshold stands at £125,000 for residential properties. This means that some people will be required to pay the tax on the portion of the property above this threshold. Some people may not need to pay the full amount, such as if they qualify for the first-time buyer relief. The amount paid will depend on the value of the property, and which band of rates it falls into.

Some people may choose to gift a person some land or a property.

So, do those receiving this gift need to pay SDLT to HM Revenue and Customs (HMRC)?

The government website states that the tax may need to be paid if the “ownership of land or property is transferred to you in exchange for any payment or ‘consideration’”.

The circumstances surrounding a transfer can affect which rules apply.

If a larger share of the property is given to a person, but no payment is made in return, then there’s no “‘consideration’ given including taking on liability for a mortgage”.

Gov.uk explains: “You won’t pay SDLT, even if the value of the extra part of the share is more than the SDLT threshold.

“You don’t need to tell HMRC about the transaction.”

Should a person get the land or property as a gift, then they won’t need to pay SDLT – as long as there’s no outstanding mortgage on it, Gov.uk says.

“But if you take over some or all of an existing mortgage, you’ll pay SDLT if the value of the mortgage is over the SDLT threshold,” the government’s guide adds.

On the other hand, some people may leave part of their estate such as their property or land to a person in their will.

“If you get land or property under the terms of a will, there’s no need to tell HMRC and you won’t pay SDLT,” Gov.uk states.

READ MORE: Stamp Duty Land Tax UK threshold – you can avoid SDLT tax if house is worth certain amount

According to the website, even if they take on an outstanding mortgage on the property on the date that the person died, then this applies – but on the condition that no other ‘consideration’ is given.

A Stamp Duty Land Tax relief, or discount, may be available for first-time buyers.

This is available if a person and anyone else they may be buying with are first-time buyers, completing the purchase on or after November 22, 2017 – as well as if the price of the home if £500,000 or less.

Should these circumstances apply, a buyer may be able to claim a relief which sees them pay no SDLT on the first £300,000 of the purchase.

They would then pay the tax at a five per cent rate on any portion of the property or land which ranges from £300,001 to £500,000.

READ MORE: Stamp Duty Land Tax UK: When do you have to pay SDLT? Deadline was brought forward in 2019

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