stamp duty confusion

[Dublove]

Trying to get my head around stamp duty. Here is the situation:

Partner and I (not married) are buying a home together. £280k.
I do not own any other property. I rent on my own.

My partner currently lives in her childhood family home. Since early 2013.
That home & deed was inherited by her & her two brothers, equal shares, from the parents who both passed away in late 2013.
One brother still lives there.
Grandmother recently was living there but is now in a carehome.
My partner sold her previous main residence elsewhere mid 2013 following divorce, to take care of her ill parents in childhood family home.

So at them moment I guess you would say my partners main residence is the childhood family home. That is the address her bank account are now in, car insurance etc etc.


So would we have to pay the additional stamp duty charge?

I read many snippets of info that are so vague and sometimes contradictory I cannot draw a reasonable conclusion.
To me, part inherited ownership is not the same as outright ownership.
She is replacing her for all purposes 'main residence'
Current 'main residence' will not be sold because the brother will still continue to live there.


Some articles I came across with examples...

A snippet from a Telegraph article:
"Someone who part-owns a property which is lived in by family, but does not own their own home, and sold a home before November 2015, would also be exempt."

Another snippet:
"If the home you are buying directly replaces your main residence, you will not be liable for the 3% surcharge, even if you own an additional home/s at the same time. This example is straight from the Government’s consultation document:"


Has anyone found themselves in a similar situation and what was the outcome?

 

[SiD the Turtle]

I went through this with my FA and solicitor when I considered keeping my flat before buying my house. In short the legislation was written to avoid people hopping around primary residences and the like, and it sounds like she's liable.

Primary residence only comes into account if you are selling it (or your share) and moving into a new primary residence, while also owning other places.

Joint ownership is the same as full ownership, else I could say I don't own a house for CGT purposes as it's split between me and my partner.

As always, speak to a professional in case they know some cheeky way around it.

 

[Skillmister]

The key is, is the "main residence/primary residence" being sold? If the answer is no, it's an almost resounding guarantee that higher rate stamp duty will be payable.

For the purposes of hmrc, "replace" tends to mean "sell and buy", not simply move out of. Hence why people who own a buy to let and live in rented for their main residence, move out of rented and into a new purchased main residence are liable.

 

[Azza]

Have a look at John Shallcross's articles - https://www.blakemorgan.co.uk/news-events/blog/hmrc-updated-guidance-sdlt/.

And the full guide towards the bottom of the page.

But essentially as Skillmister says, yes you would have to pay the surcharge if your partner is not selling her main residence (the family home).

You don't even need to fully own another property now, a majority share will mean you're liable as well.

 

[NVP]

 

[pepp77]

Basically yes as she is already on the deeds for one property she will have to pay higher stamp duty for this her second home. Just had this myself with my mum.

 

[Syla5]

Is buying the house in your name only possible, and then immediately adding your wife on to the deeds an option? Would save money.

 

[Skillmister]

Is buying the house in your name only possible, and then immediately adding your wife on to the deeds an option? Would save money.

I believe properties owned by spouses are treated as owned jointly. Don't you think HMRC thought of that simple workaround?

Q17. I own a house with my husband and I live in as our main residence. My husband is planning to buy a flat to rent out – this will be in his name only. As we will then only own one property each I assume the higher rates will not apply to the purchase of the flat?
A17. The higher rates will apply to the purchase of the flat. As a married couple all property owned by either of you is treated as owned jointly. The purchase of the flat will therefore be classed as an additional residential property for both of you.

I think it is supposed to read: "I own a house which my husband and I live in as our main residence" which makes sense for the answer.

&

3.44 Where an individual with a spouse or civil partner purchases an interest in a dwelling and their spouse or civil partner is not a joint purchaser, the spouse or civil partner will be treated as a joint purchaser in respect of the transaction38.

Plus, if OP is buying with a mortgage "adding his wife to the deeds" would involve a transfer of equity which would be liable for Stamp Duty anyway?

 

[Syla5]

I believe properties owned by spouses are treated as owned jointly. Don't you think HMRC thought of that simple workaround?

OP said they are not married.

 

[Skillmister]

You posted wife!

 

[Syla5]

I did, my bad on that, but yeah OP is not married, so assuming it is an option?

 

[Azza]

OWNERSHIP OF THE PROPERTY – SPOUSES AND CIVIL PARTNERS

HMRC states: "You may be viewed as the owner of a property if it is owned by your spouse or civil partner.
This means if one of you already owns a property and the other person purchases another property, the purchase will be charged at the higher rates. Spouses or civil partners that are permanently separated will not be treated in this way."

This is not what the legislation says! Sloppy language can lead to confusion. The previous version of 30 August 2016 was not so misleading. It had said: “If you’re married or in a civil partnership, buying a property and your spouse or civil partner already owns a property you may still be liable to the higher rates. But you may be able (sic) claim a refund if they then go on to sell it.”

What the legislation says is that a spouse or civil partner is usually treated for surcharge purposes as a joint purchaser, even if they are not joining in the purchase.

https://www.blakemorgan.co.uk/media...urcharge_additional_guidance_-_march_2017.pdf


There doesn't seem to be any definitaive answer (surprise surprise) to adding onto the deeds later for additional SDLT but you'd still need to pay normal SDLT, I assume you're getting a mortgage.

https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

see - Example 2 - you pay SDLT even though no money changes hands



You can't 'gift' a share of a property either if there is an outstanding mortgage - https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property#gift

If you get property as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay SDLT if the value of the mortgage is over the SDLT threshold.

You would assume that they'd be able to see that she is on the title of another property as the only owner and therefore charge her additional SDLT on top.

 

[Skillmister]

Assuming OP is getting a mortgage

I don't see any way of getting around it when "adding her on to the deeds" seeing as a Stamp Duty Return will need to be filled out and the solicitor will select the option for "additional residential property - higher rate stamp duty" as the property type, assuming OP/his SO have correctly given the information that she owns a share in other property.


We have had to make significant changes to our initial paperwork and questionnaires as the onus is on the solicitors to find out all the information and clients seem very adept at forgetting they own additional properties

OP - my advice, bearing in mind I am not a tax adviser nor should anyone take anything posted by me as legal advice, is to buy a property with an area of land large enough to be classed as agricultural (doesn't have to be that big really), rent the land out for grazing or graze it yourself and the property may* be classed as mixed use which is not liable for higher rate

*HMRC take each property on a case by case basis and one mixed use property does not set a precedent for others.

 

[SiD the Turtle]

If you don't put her on the deeds, the mortgage company won't take any of her income into account when it comes to amount you can raise for a mortgage, and they'll get you to sign a waiver that says she has no interest in the house and she has no right to claim ownership over it.

 

[Psycho Sonny]

If you don't put her on the deeds, the mortgage company won't take any of her income into account when it comes to amount you can raise for a mortgage, and they'll get you to sign a waiver that says she has no interest in the house and she has no right to claim ownership over it.

this would apply to OP since they are not married. if married then it doesn't matter if one or both are on the deeds, it just makes inheritance issues easier iirc to have both on it.

 

[psd99]

there is no way around this from what you've told us

you will end up paying the higher rate for stamp duty.

Blame those Tories who made this change, they probably all have a large portfolio of buy to let properties already.
This change would never have impacted them anyway!

 

[Psycho Sonny]

there is no way around this from what you've told us

you will end up paying the higher rate for stamp duty.

Blame those Tories who made this change, they probably all have a large portfolio of buy to let properties already.
This change would never have impacted them anyway!

had they not introduced it you would have slated them for letting the buy to let market spiral out of control. lose/lose situation for them if you look at everything with tinted glasses.

to me it seems like a good change. more taxes on those who buy multiple properties when people are struggling to buy one. All OP has to do is get his partner to sell her share in the house. Why keep it unless it's an "investment"? Therefore rightly so they should then have to pay more tax on this other property purchase.