Will I pay stamp duty on half of a £175,000 house?

Q I am selling my house and planning on moving in with my boyfriend, who also owns his home. I plan to settle his mortgage (currently equal to the equity from my house sale) and we would then own the property outright.

However, his property is estimated at £175,000 and therefore my half-share would cost £87,500. Would I be liable for stamp duty on the whole price of his property's market value or might it be exempt as the transaction is below the £120,000 threshold? Also, might there be any other tax implications?

And would we be better off converting his mortgage for £87,500 to an offset one and then using my equity to bring the outstanding balance to £0 - would this protect our equity better than paying the mortgage off outright?

JW

A No, you won't have to pay stamp duty because the tax is charged on the value of the transaction rather than the full market value of the property. At £87,500, your proposed transaction (of buying a half share in your boyfriend's property) is well below the £120,000 threshold at which the tax becomes payable.

There are no other taxes to pay but there will be legal fees involved in transferring the ownership of the property from your boyfriend's sole name to your joint names. As far as structuring the finance goes, paying the mortgage off outright is likely to be simpler and cheaper than switching to an offset mortgage and then essentially paying the mortgage off outright by reducing the loan to zero.

And your equity is protected whichever course of action you choose. The only advantage I can think of in, say, keeping on a small mortgage on the property is that your lender will look after the title deeds for you. If you pay off the mortgage in full, the deeds will be returned to you and you'll have to find somewhere secure to keep the deeds which may involve having to pay a bank to store these vital documents in their safe for you.