I currently have a mortgage on an investment property which is mortgaged under my name only. I wish to refinance with another lender and at the same time include my wife's name with the new lender.
The old mortgage is under my name only whereas the refinanced mortgage will be in joint names. Any stamp duty payable in my case?
Any insightful comments will be helpful. Thanks.
"Sometimes however the bank will allow the partner's name to be added to the loan contract only and not require it on the title. In that case she is not acquiring any of the property (just liability for the loan), so no stamp duty issues"
I think this is whats happening… How do i confirm with the lender that my wife is NOT being added ro the title? I am using the new lender's solicitor, do ineed to seek another solicitor for independant advice?
How do i confirm with the lender that my wife is NOT being added ro the title?
Ask them? If you haven't signed or arranged a transfer (depending on the state), then it is not something the bank will do.
Just to be clear, you are not using the lender's solicitor - the lender is using a solicitor and they are definitely not acting for you. Unless there is something unusual in your circumstances there is no real need for separate legal advice on mortgage docs.
Well…. depending on your lender, they may insist on your wife getting independent legal advice on this transaction, if she's going to be a borrower but not on title. Especially for an investment property. And if this is the case (on loan but not on title) there will be no stamp duty liability. Just check with your accountant as to your taxation position - if she is a borrower can you still claim 100% of interest as a deduction against the rent?
You pay 50‰ of the stamp duty if you are adding her to the title, effectively selling half of the property to her. But she doesn't need to be on the title to be on the loan.
Consider sitting down with a professional to workbout tax benefits and liabilities, because this is an investment property, you also need to consider capital gains tax when you transfer the property and how the rental income and subsequent deductions will work if your property becomes jointly owned.
Why are you adding her on to the loan in first place?
Increase borrow power
The refinanced mortgage will be in both names, but the title of the investment property can still stay in your name.
That’s not an issue then in terms of stamp duty ! It just gives bank more security for the loan and enables them to lend you more !
I don’t think it will be tax deductible though as my agent told me sometime back and argument for deduction flows from title !
Will be interested to know if you get different advice
As far as I can see reading the OPs post he only wanted to refinance under both him and is wife's name, he never stated changing names on the title deeds.
Assuming you want your wife's name on the title, then yes, your wife is acquiring 50% of a property and is liable for duty on 50% of the value. Some states have exemptions/concessions for spouses adding each other on title, but they are usually only for principal place of residence rather than investment properties.
Sometimes however the bank will allow the partner's name to be added to the loan contract only and not require it on the title. In that case she is not acquiring any of the property (just liability for the loan), so no stamp duty issues.
You will more than likely need a solicitor or conveyancer to arrange the transfer and stamping if you go that way, so I would discuss it with them.