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Dear Property Doctors
Last year I moved in with my partner and paid her £100,000 for a 20pc interest in her property. As the sum was below the stamp duty threshold, no tax was payable.
If I were to purchase another 20pc of the property some time in the future, again for £100,000, am I right in thinking this second instalment would now attract stamp duty, as the total consideration of £200,000 would now be above the £125,000 threshold - or is stamp duty liability based only on a “per transaction” basis?
JF, via email
The level of the consideration for each transaction is below the Stamp Duty Land Tax threshold, however when there are two or more transactions between the same buyer and seller these are generally “linked” for SDLT purposes.
Where transactions are linked, SDLT is due based on the total value of all the linked transactions and then apportioned between each of the transactions. Assuming you do not own another residential property, the SDLT due on the second purchase would be £1,500, based on total consideration of £200,000 and current rates.
As the payment of £100,000 is the same in each transaction, the apportioned SDLT would be £750 per transaction. You would need to file an SDLT return within 14 days of the transfer, complete the relevant entries to confirm that this is a linked transaction and pay the SDLT of £750. You will also need to file an SDLT return in respect of the earlier transaction and again pay the additional SDLT due of £750.
The rules are more complex when there is a rate change between the occurrence of the “linked” transactions.
Stefanie Tremain is a Private Client adviser specialising in UK tax at accountancy firm Blick Rothenberg