If I swap properties with my daughter, will we have to pay stamp duty?

Q I own a house. The property is a second home and not my primary residence. My daughter and my son-in-law have a mortgage on their apartment. We want to exchange properties because I no longer need the house. No money will change hands as the properties are of similar values. Do we have to pay stamp duty? Does my daughter need to have a different mortgage or can she transfer the one she has?MK

A Yes, your daughter and son-in-law will need to take out a mortgage on your house to pay off the mortgage on their apartment when they move out. They may be able to move their current contract, but only if the lender is happy to secure the mortgage on their new home.

While no money changes hands, there will be a land stamp duty (SDLT) bill for you and them. They will pay the standard SDLT rate on the value of your home minus the SDLT zero rate band of £125,000. You, on the other hand, will pay SDLT's higher rate (which is the standard rate plus three) on the full value of their apartment because it's not your primary residence.

You may also face a Capital Gains Tax (CGT) bill if the gain on disposal of the property exceeds your annual CGT zero rate bracket of £12,300 during the year tax 2022-23. The rate of CGT you will pay will be 18% if you are a basic rate taxpayer and 28% if you pay tax at the highest rate.