Whether you’re remortgaging to get a better rate, borrow more, or for any other reason, it’s essential to be fully aware of all the potential charges involved - and whilst it only applies to remortgages in a few situations, one of those could be stamp duty. Here’s everything you need to know about stamp duty when remortgaging.
What is stamp duty?
Stamp Duty, or to give it its official name, Stamp Duty Land Tax (SDLT), is tax that home buyers need to pay when purchasing property or land over a specific value.
Stamp Duty applies in England and Northern Ireland, while homebuyers in Scotland need to pay Land and Buildings Transaction Tax, and buyers in Wales pay Land Transaction Tax.
For information on the latest rates that apply, have a look at our stamp duty calculator.
Do you pay stamp duty on a remortgage?
You need to pay Stamp Duty on new home purchases, but do you have to pay Stamp Duty on a remortgage? The good news is no, if you’re just remortgaging to a new deal or raising money for home improvements then you don’t need to pay any Stamp Duty when remortgaging.
That’s because the tax is only applicable on purchases of new property or land. So if you’re remortgaging your existing home to get a better rate, or fund home improvements, you don’t need to worry about paying Stamp Duty.
Do you pay stamp duty on transfer of equity and remortgage?
The exception to this is if you’re transferring the legal title of the property when remortgaging. In this case, either you or the person you’re transferring the property to may be liable to pay this, but it varies depending on the circumstances.
What is transfer of equity?
Transfer of equity is when a homeowner adds or removes someone (or multiple people) from the property's title, thus transferring ownership of the property to another person.
There are various reasons for transferring ownership of a property, but they include:
- Selling your share of a property
- Adding a new partner to the property title
- Buying out an ex-partner’s share of a property
- Gifting your property
How is stamp duty calculated when you transfer equity?
Stamp Duty is paid on the 'chargeable consideration' when transferring equity. When you buy a property outright, the chargeable consideration is the property's purchase price. But when transferring equity, it's calculated as the mortgage plus the amount being paid for the equity.
The Stamp Duty rates for the transfer of equity are the same as for purchasing a property, so if you're remortgaging while also transferring equity, you'll be liable to pay this tax at the applicable rates.
Are there any exemptions to Stamp Duty when transferring equity?
There are some instances where you don't need to pay Stamp Duty when transferring ownership of a property to someone else. These are:
- If you gift a property to a child, spouse, civil partner, or another family member and there is no chargeable consideration
- If you’re left a property in a will and no payment is being made for the share
- If you get the property as part of a divorce or separation
Find out more about remortgaging
Now you know everything that you need to be aware of when it comes to Stamp Duty on remortgages, it’s time to start applying for your remortgage. You can read more about the remortgage process, and then get in touch with our expert advisers, who’ll search the market to find the right remortgage deal for your circumstances.
