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Do you have to pay stamp duty when buying out your partner?

Do you have to pay stamp duty when buying out your partner?
Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: July 13, 2022

Yes and no. It all depends on your marital circumstances.

If you are married or in a civil partnership.

If you’re married and are divorcing, or in a civil partnership that you wish to dissolve and one partner wishes to buy the other one out, then usually you will not have to pay stamp duty.

The reason for this is that if a property is being sold or transferred to one or the other partner as part of agreement or court order, which is incorporated as part of a divorce or dissolution proceedings, then stamp duty is not payable.

This means that as long as buying out your partner as part of your divorce or dissolution proceedings, it shouldn’t cost you a penny in stamp duty.

What if you are not married to your partner?

Now here we have some bad news.

If you are an unmarried couple, who own a home together and decide to separate, you will have to pay stamp duty if one wants to buy the other partner out.

But if the buyout is under the £125,000 threshold at which stamp duty becomes payable, then there will be no costs incurred as far as stamp duty is concerned.

But for some reason, if you get married or enter into a civil partnership, and you want to transfer a share of your property to your husband, wife or civil partner, then there may be a stamp duty payable.

In this instance, sales tax is payable if the ‘consideration given’, which is how much cash is paid or the amount of the mortgage taken, or a combination of both, exceeds the £125,000 threshold.

Other things to consider.

There are a number of factors to take into account before you decide to ‘buy out’ your partner.

Not least is whether you are able to afford the repayments if you need a mortgage and, if you have a good enough credit score to take over an existing mortgage.

The other is whether you are still on a fixed rate deal, which may incur early repayment fees if you renegotiate the mortgage.

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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