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I want to buy my ex-husband's share of our house – how much should he get?

<span>Photograph: Alamy</span>
Photograph: Alamy

Q My ex-husband and I are currently joint tenants of a property I live in with our daughters. As we are now divorced, we are in the process of becoming tenants in common.

If I were to buy him out of his 50% share, would he get 50% of the market value, or market value minus mortgage then 50% of the equity that is left?
EP

A A lot depends on what financial settlement you and your ex-husband agreed on divorce. But if that does give your ex-husband a 50% share in the family home – and you agreed to buy him out now rather than when your daughters have left home – then he would get a cash payment of half the equity in the property which is the market value minus the amount outstanding on the mortgage. In addition, he would be relieved of his half of the mortgage debt.

To be able to buy him out, you need to make sure that your lender is happy for you to take responsibility for the whole of the mortgage on your own. So for example, if your house is worth £500,000 and there is £300,000 left on the mortgage, you would have to be able to afford a £300,000 mortgage and make a cash payment of £100,000 which represents half the equity of £200,000 (ie £500,000 minus £300,000).

If you are able to buy your ex-husband’s share of the property, the good news is that there would be no stamp duty land tax (SDLT) to pay. However, that’s not only because of the SDLT holiday which applies in England and Northern Ireland, but because you are splitting the property as a result of divorce (the same applies to couples ending a civil partnership).

Where an unmarried couple split up there is a potential SDLT bill if the “consideration given” which includes cash paid and the transfer of debt comes to more than the tax-free limit. So in the example above, the consideration given is the £100,000 cash plus £150,000 (which is half the mortgage) so a total of £250,000. This is well within current £500,000 SDLT-free limit on purchases and transfers of residential property until after 31 March 2021. But from that date when the SDLT-free limit goes back down to £125,000, half of that £250,000 would be subject to SDLT meaning a bill of £6,250.

In Scotland the equivalent of SDLT is the land and buildings transaction tax (LBTT). Since 15 July 2020, the LBTT nil-rate band for residential property transactions has gone up from £145,000 to £250,000. In Wales, where land transaction tax (LTT) applies, since 27 July 2020 the nil-rate band has gone up from £180,000 to £250,000. Throughout the UK, taxes on residential property transactions go back to normal on 1 April 2021. The current rules which make transactions between married couples and civil parters who are splitting up exempt from SDLT, also apply to LBTT in Scotland and LTT in Wales.