Second Home SDLT Question!

[Dunks]

Calling all OcUK legal eagles...

Currently in contact with a couple of solicitors regarding this issue, but in the mean time why not ask OcUK!

Me and my partner are currently buying our first home, contracts have been signed but we've not yet exchanged.

A slight lapse on our part resulted in us forgetting that my partners parents purchased a property in her and her sisters names in 2011, and it's remained in their names ever since.

Now, with the second home SDLT change taking force last week, we'd rather not pay an additional £11k in stamp duty ontop of our original £9k...

We're in touch with the solicitor who acted on their behalf about transferring the property to her sister only, which seems to be a fairly straight forward thing to do is there is no mortgage. Although costing around £400!

But the question is, as long as we do this before completion we should not be liable for the additional 3% SDLT. Correct?

Just worried that even though we can complete the legal paperwork to transfer ownership quickly before completion it could take a while for the land registry to fully update deeds etc.

 

[MoRT489]

It comes down to how many properties a person owns at the end of the day of the transaction. If she's transferred the old property out of her name then it seems clear that she will only own one property when you complete the new sale. I would think that the transfer will take effect from when the transfer form is executed rather than when it is registered at the Land Registry but a property lawyer will need to advise you on that. Rather than instructuring multiple solicitors why not just ask the ones who did your current property purchase?

See advice from Gov.uk here - https://www.gov.uk/government/consu...urchases-of-additional-residential-properties

 

[R.O.S.S.I]

Above is correct. But why didnt you just ask the solicitors you are in contact with and presumably paying? They would tell you in 2 minutes what the situation is.

 

[Dunks]

I've asked them the question, just waiting on them to get back to me, just playing on my mind to thought someone on OcUK might be able to offer some assurance

Buying a house is not as simple as first thought!

 

[Alex_L]

Without knowing your circumstances, do you really want to give up a 50% stake in another property over an 11k tax bill on your current purchase?

 

[Destination]

Without knowing your circumstances, do you really want to give up a 50% stake in another property over an 11k tax bill on your current purchase?

That was my first ponderance!

 

[Tosno]

11k extra! That's an expensive business partner! Time for a new one without property.

 

[dowie]

Without knowing your circumstances, do you really want to give up a 50% stake in another property over an 11k tax bill on your current purchase?

This

also what do you mean by you've signed contracts but haven't exchanged out of interest? When I bought my property there wasn't anything to sign until exchange IIRC

 

[Deleted member 66701]

Without knowing your circumstances, do you really want to give up a 50% stake in another property over an 11k tax bill on your current purchase?

I'd assume his parter isn't just "giving up her stake" but rather letting her sister buy out her share.

 

[Psycho Sonny]

I'd assume his parter isn't just "giving up her stake" but rather letting her sister buy out her share.

I'm imagining that she has given her sister it all in name but has a "secret handshake" agreement that she owns the other half.

legally she doesn't but she obviously trusts her sister enough to do this.

personally i think it's tax avoidance and therefore they should actually sell the other property or pay the tax.

 

[Destination]

I'd assume his parter isn't just "giving up her stake" but rather letting her sister buy out her share.

One would then assume there would be capital gains to be paid, as they do not live in the property.
Might total to more than the stamp.

 

[Deleted member 66701]

One would then assume there would be capital gains to be paid, as they do not live in the property.
Might total to more than the stamp.

Yeah, I suppose. Property would only need to rise by £100k to generate an £11k cgt bill.

 

[Skillmister]

This

also what do you mean by you've signed contracts but haven't exchanged out of interest? When I bought my property there wasn't anything to sign until exchange IIRC

You can sign the sale contract at any time, the day you instruct your solicitors if you fancy (if they were to bother preparing it that day!). "Exchange" is when the solicitors run through the contracts on the phone and set the completion date i.e bind you to the transaction. "Signing contracts" is a process that has no tangible effect on the transaction other than enabling your solicitor to bind you to the transaction, the actual signing itself means nothing. Typically you wouldn't expect to sign the contract until near exchange as there is no benefit but I've had people sign weeks/months in advance where necessary.

 

[HangTime]

Forgetting you own a house - don't you just hate it when that happens?

 

[Dunks]

Forgetting you own a house - don't you just hate it when that happens?

First world problems right?

Looks like the property will instead be sold, and if we complete on the second property prior to this, we'll just claim back the additional 3% within the 18 months allowed.

 

[Dunks]

You can sign the sale contract at any time, the day you instruct your solicitors if you fancy (if they were to bother preparing it that day!). "Exchange" is when the solicitors run through the contracts on the phone and set the completion date i.e bind you to the transaction. "Signing contracts" is a process that has no tangible effect on the transaction other than enabling your solicitor to bind you to the transaction, the actual signing itself means nothing. Typically you wouldn't expect to sign the contract until near exchange as there is no benefit but I've had people sign weeks/months in advance where necessary.

Pretty much this. Just waiting to hear back from the vendor on a couple of items but we shoudn't need to again go back to our conveyancer to sign the documents after our previous visit!

 

[MoRT489]

Does it work like that? I thought it had to be changing one main residence for another if you wanted to do the clawback within 18 months.

 

[Dunks]

Does it work like that? I thought it had to be changing one main residence for another if you wanted to do the clawback within 18 months.

Yes you're right it seems. She's never lived in the property, and currently lives at home, so we would not be replacing the main residence.

We let our solicitor know about this issue on Monday, she said she'd get back to us ASAP. It's now Thursday and I've just called her, and she's just looking into it and will get back to me... Not feeling value for money here!