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UK Property Tax Portal
UK Property Tax Q&A
Must the value of our properties be added together for stamp duty purposes?
Question
My mother is selling her house to her grandson for £138000 and her grandson is selling his house to my mother for the same amount. They have been independently valued at these amounts for mortgage purposes. We have been informed by our solicitor that because they are related the value of both properties must be added together for stamp duty purposes which puts them into the 3 percent bracket. Both houses are in a disadvantaged area so if valued at £138000 no stamp duty would be payable, but as they are being added together not only does it put the payment up but also means we can't claim the money back as it's a disadvantaged area. Can you tell me if this is factually correct and if there is any way to not have to pay this duty which seems slightly crazy bearing in mind that if they were strangers they wouldn't have to pay it. It seems that they are being penalised for being related.
Arthur Says As your question stands, unfair as it may seem, the solicitor is correct. However, if, instead of doing the exchange, the first side physically paid £138,000 to the second side, and acquired the second house, and then when the dust had settled on the first transaction, the second side physically paid £138,000 to the first side and acquired the first house, as an independent transaction, then maybe the Revenue would accept that there should be no Stamp Duty to pay.
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