Individual acquiring a half share of a dwelling and assuming existing mortgage debt

Ben owns his main residence and lives there with his partner Holly, who already owns a buy-to-let dwelling. Ben wants to transfer a one half share of his main residence to Holly, who agrees with Ben that she will be liable for  a one half share of Ben’s existing mortgage.

The chargeable consideration will be based on the value of the existing mortgage plus any cash sums paid. The existing mortgage on the dwelling is £300,000. As no cash is being paid, the chargeable consideration will therefore be a half share of the existing mortgage, £150,000.

LBTT will apply on the value of the half share of £150,000. ADS will also apply on the amount of £150,000 as Holly will now own more than one dwelling and she is not selling or disposing of her previous main residence.

If Holly had agreed to be jointly and severally liable along with Ben for the whole of the mortgage then the chargeable consideration would be the whole amount of the mortgage, £300,000.

Information on debt as consideration can be found in LBTT2003.

 

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