I have finally found a house I wish to buy, the owner of which is keen on buying my own property. If we do a “swap” will I make a substantial saving in Stamp Duty Land Tax?
Sadly the answer is no. It has been many years since the Inland Revenue introduced the rule in which Stamp Duty Land Tax (SDLT) is no longer payable on the “Equality of Exchange” being the term used for the difference between the two sale prices.
Previously, the former Stamp Duty was only payable on the Equality of Exchange, which made exchanges of properties between interested parties a cost-effective and attractive proposition.
When you consider the extent of revenue lost by the Inland Revenue to such transactions this is hardly surprising. A sale of a property at £400,000 would attract tax of £12,000 which, when swapped for a property worth £300,000, the duty of which is £9,000, would have previously resulted in no Stamp Duty payable and a saving of £21,000 as the “equality of exchange” of £100,000 would, of course, have been exempt from Stamp Duty Land Tax.
The current rule, therefore, is that Stamp Duty Land Tax is assessed separately on each property based on the two figures quoted.