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bigduckontax
bigduckontax, Accountant
Category: Tax
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Would I have any tax liability if my partner buys me out of

Customer Question

Would I have any tax liability if my partner buys me out of the house we currently owner occupy on a joint mortgage.
Value 350k current mortgage 144k.Buy out amount undecided as yet as we also jointly own outright another piece of land unincubered by mortgage and may accept sole ownership of that instead.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. In this answer it has been assumed that you have no legal connection with your partner (ie mariage, civil partnership etc). As you are an owner occupier of your sole or main domestic residence when your share is sold to your partner you are entitld to Private Residence Relief (PRR) which relieves apital Gains Tax (CGT) at 100%. Many people do not realise when they sell their homes that they are subject to CGT as PRR is given automatically. The acceptance of the plöt of land as consideration for your share of the house has no effect on you save that you are deemed to acquire it at the current market value. Your partner will attract CGT on their share of the gain made on the sale. They would have an Annual Exempt Amount of 11,1Kto offset this gain. I do hope that my reply has been of assistance.
Customer: replied 1 year ago.
Hi, great answer and good news, but made no reference to stamp duty.Can i therefore assume by your answer that this will also not apply in this situation
Expert:  bigduckontax replied 1 year ago.
Assuming that the property is located in England or Wales then Stamp Duty Land Tax would apply to the value of the consideration given for the transaction. In Scotland under recently devolved powers then Land and Buildings Transfer Tax would apply. The rates differ slightly between the two countries.
Customer: replied 1 year ago.
Thank you. My understanding of what you have said is that,(Leaving asside the other plot of land) as our main residence is in England and provided I accept less than £125,000 for my share it, no stamp duty will apply.
Expert:  bigduckontax replied 1 year ago.
Correct, but you still have to make a SDLT return even though no tax is due. Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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