Transfer of Equity
Stamp duty when adding or removing names from property ownership.
Key Takeaways
- Divorce and separation transfers are exempt from SDLT only if completed under a formal written agreement signed by both parties or a court order
- Mortgage assumption counts as chargeable consideration; adding a partner to a £200,000 mortgage for 50% share triggers SDLT on £100,000
- Gift transfers with no consideration (cash or mortgage) incur £0 SDLT, but the recipient must still file an SDLT return if property value exceeds £40,000
- The additional property surcharge applies if the recipient owns or jointly owns another property, even in a pure equity transfer scenario
- Transfers between unmarried cohabitants receive no automatic exemption. SDLT is due on any chargeable consideration regardless of relationship length
- When removing a co-owner, SDLT is calculated on the share being acquired, not the entire property value, a 50% buyout on a £400,000 property means SDLT on £200,000
- Informal separation agreements do not qualify for the divorce exemption. Couples must document the transfer properly to avoid unexpected SDLT bills
- Death of a joint owner creates no SDLT liability for the surviving owner as property passes by survivorship, not as a chargeable transaction
In this article
What is Transfer of Equity?
A transfer of equity is when you add or remove someone from the ownership of a property without selling it outright. Use our stamp duty calculator to estimate potential tax. Common scenarios include:
- Adding a partner or spouse to the deeds after marriage
- Removing an ex-partner after divorce or separation
- Transferring a share to a family member
- Removing a deceased person from joint ownership
When is Stamp Duty Payable?
SDLT is calculated on the "chargeable consideration" - any payment made for the transfer. Calculate using our transfer of equity calculator. This includes:
What Counts as Consideration
| Type | Counts? | Example |
|---|---|---|
| Cash payment | Yes | Buying out partner's share |
| Mortgage assumption | Yes | Taking on their share of debt |
| Gift (no payment) | No | Pure gift to family member |
| Spouse transfer | No* | Transfer between married couple |
*Transfers between spouses/civil partners are exempt
When SDLT Applies
Transfer of equity SDLT rules can be complex because the tax only applies when consideration (something of value) changes hands. Understanding what counts as consideration is crucial to determining whether SDLT is due.
Consideration Includes
- Cash payments: Direct payment to buy out someone's share of ownership
- Mortgage assumption: Taking over someone else's portion of an existing mortgage counts as paying them that amount
- Outstanding liabilities: Assuming responsibility for debts secured against the property
- Other debt: Taking on loans or obligations in exchange for the equity transfer
Pure Gifts Are Exempt
If you transfer equity as a genuine gift with no payment, mortgage assumption, or other consideration, no SDLT applies. However, if there's any mortgage on the property, even a pure gift may trigger SDLT because the recipient is taking on their share of that mortgage debt.
Important Note on Mortgaged Properties
Even if no cash changes hands, if the property has an outstanding mortgage and the person being added to the deeds will be liable for their share of it, this counts as consideration. For example, if you add your partner to a property with a £200,000 mortgage and they take 50% ownership, they're assuming £100,000 of mortgage debt, which is chargeable consideration for SDLT purposes.
Divorce and Separation
Transfers of property between spouses or civil partners in connection with divorce or dissolution are treated favourably by HMRC and are usually exempt from SDLT. See our detailed divorce stamp duty guide for full details.
Qualifying for Divorce Exemption
To qualify for the exemption, the transfer must be:
- Between spouses or civil partners (not unmarried couples)
- Made in pursuance of a court order or formal separation agreement
- Connected to the breakdown of the marriage or civil partnership
- Completed while the divorce/dissolution proceedings are ongoing or shortly after
The exemption applies even if one person is buying out the other's share and assuming the full mortgage. The transfer is treated as part of the financial settlement rather than a property purchase.
Unmarried Couples
If you're not married or in a civil partnership, the divorce exemption doesn't apply. Transfers between unmarried partners are treated as standard property transactions, with SDLT due on any consideration paid (including mortgage assumption).
Marriage Benefit
This is one area where married couples and civil partners have a significant tax advantage. A divorce property transfer with £300,000 consideration that would cost a cohabiting couple £5,000 in SDLT costs married couples £0.
Adding a Partner to Your Mortgage
When you add someone to both the property deeds and the mortgage, SDLT calculation depends on their share of the outstanding mortgage they're assuming. This is one of the most common transfer of equity scenarios.
How the Calculation Works
The chargeable consideration is the portion of the mortgage the new person is taking on, calculated as their ownership percentage multiplied by the outstanding mortgage balance. For example:
Example Calculation
Property value: £350,000
Outstanding mortgage: £200,000
Share being transferred: 50%
Consideration: 50% × £200,000 = £100,000
SDLT: £0 (under £125,000 threshold)
If the person being added already owns another property, add 5% surcharge = £5,000 SDLT
No Cash Payment Required
Even if the person being added doesn't pay you any cash, the mortgage assumption alone creates chargeable consideration. The lender typically requires them to sign the mortgage deed, making them jointly liable for the debt.
Removing Someone from a Joint Mortgage
When one joint owner buys out the other and takes over the full mortgage, this is the mirror image of adding someone. The person remaining pays SDLT on the equity they're acquiring.
Calculating the Consideration
The total consideration includes:
- Any cash payment to buy out the departing owner's share
- The portion of the mortgage the remaining owner is taking over
For example, if you and your partner jointly own a property worth £400,000 with a £250,000 mortgage, and you buy out their 50% share for £75,000 cash while assuming their half of the mortgage (£125,000), your total consideration is £200,000. This would result in SDLT of £1,500.
Additional Property Surcharge Risk
If you already own another property and are taking full ownership of the shared property, you may owe the 5% additional property surcharge on the entire consideration. This can add thousands to the SDLT bill, so seek professional advice in complex ownership situations.
Common Scenarios
Adding a Partner (Not Married)
If you add an unmarried partner to your property deeds, SDLT may apply based on:
- • Any cash they pay for their share
- • Their share of the outstanding mortgage they take on
- • The 5% surcharge may apply if they own another property
Divorce/Separation
Usually No SDLT
Transfers between spouses/civil partners as part of divorce are exempt. The transfer must be made under a court order or separation agreement.
Removing Ex-Partner (Not Married)
SDLT May Apply
If you're buying out an unmarried partner, SDLT applies to any consideration (cash payment + their share of mortgage you take on).
Example Calculations
| Scenario | Consideration | SDLT Due |
|---|---|---|
| Add spouse to deeds | Any amount | £0 (exempt) |
| Gift 50% to child (no mortgage) | £0 | £0 |
| Add partner, they take 50% of £200k mortgage | £100,000 | £0* |
| Buy out ex-partner: £150k cash + £50k mortgage | £200,000 | £1,500 |
*Under the £125,000 threshold. If the new person owns another property, add 5% surcharge.
Worked Example: Adding Partner to £300,000 Property with £200,000 Mortgage
This detailed example shows how SDLT is calculated when adding an unmarried partner to property ownership where there's an existing mortgage.
Scenario Details
- • You own a property worth £300,000
- • Outstanding mortgage: £200,000
- • You want to add your partner as 50% owner
- • Your partner doesn't currently own any property
- • No cash is changing hands
Step 1: Calculate Chargeable Consideration
Your partner is taking on 50% ownership, which means they're assuming 50% of the mortgage debt:
Consideration = 50% × £200,000 = £100,000
Step 2: Apply SDLT Rates
| £0 - £100,000 @ 0% | £0 |
| Total SDLT | £0 |
Result
Because the consideration (£100,000) falls below the £125,000 threshold, no SDLT is due. Your partner needs to be added to both the property deeds and the mortgage, and an SDLT return must be filed with HMRC even though the tax due is £0.
If Your Partner Owned Another Property
The 5% additional property surcharge would apply:
SDLT = 5% × £100,000 = £5,000
Additional Property Surcharge
The 5% surcharge can apply to transfers of equity if the person being added already owns another residential property. This catches situations like:
- Adding a partner who has their own home elsewhere
- Adult child with their own property being added to parents' house
The surcharge applies to the entire chargeable consideration, not just the portion above a threshold. Even small transfer of equity transactions can trigger significant SDLT if the recipient owns another property. There are replacement main residence provisions that may provide relief if the person is selling their existing home and this will become their main residence, but timing is critical.
Frequently Asked Questions About Transfer of Equity
Do I pay stamp duty on a transfer of equity?
Only if consideration (payment or value) changes hands. This includes cash payments, mortgage assumption, or taking on debts. Pure gifts with no mortgage attract no SDLT. Transfers between spouses as part of divorce are exempt. If you add someone to a mortgaged property, they're assuming their share of the debt, which counts as consideration.
Is stamp duty due on divorce transfers?
No. Transfers of property between spouses or civil partners in connection with divorce or dissolution are exempt from SDLT, regardless of the value transferred or mortgage involved. The transfer must be made under a court order or formal separation agreement. This exemption does not apply to unmarried couples, who pay standard SDLT on any consideration.
How much stamp duty when adding someone to a mortgage?
Calculate the person's share of the outstanding mortgage balance. For example, adding someone as 50% owner to a property with £200,000 mortgage means £100,000 consideration. On £100,000, SDLT is £0 (under threshold). If they own another property, add 5% surcharge (£5,000 in this example). Standard residential SDLT rates apply to the consideration amount.
Do I need a solicitor for a transfer of equity?
While not legally required, it's highly recommended. A solicitor handles Land Registry applications, prepares the transfer deed, calculates SDLT correctly, files the SDLT return with HMRC, and ensures mortgage lenders approve the change. DIY transfers risk errors that could cost more than solicitor fees. Most mortgage lenders require solicitor involvement anyway.
Is a gift of property subject to stamp duty?
Pure gifts with no consideration attract no SDLT. However, if the property has a mortgage and the recipient becomes liable for any portion of it, that mortgage share counts as consideration and may trigger SDLT. Gifts to family members on mortgage-free properties genuinely incur no SDLT, though you still must file an SDLT return declaring nil tax due within 14 days.
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Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.
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