PLEASE READ BEFORE POSTING
Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.Scotland - 3% Additional Dwelling Supplement.
Leo-67
Posts: 2 Newbie
Hello,
I own a home with my ex-wife, although technically still married, we split around 6 years ago. I moved out of the marital home and have settled now with a new partner and family. We haven't got around to divorce, more so to figure out what to do with the house that we own.
I want to buy a new house with my current partner and have run into the stumbling block of the ADS applicable in Scotland. The new house I want to buy will be in the £300k region so current rate of LBTT + ADS = £13,600 (£4,600 LBTT and £9k ADS)
The problem I have is my previous home. The house is worth around £175k with a mortgage outstanding of £85k. There's about £90k equity in the house. The £650pm mortgage amount still comes out of my bank account each month, my ex pays me £350 and the remainder £300 is my child maintenance contribution. She is in effect funding the whole £650pm mortgage. We have owned the house 12yrs, 6 yrs together, 6yrs separated.
I believe I would need to remove my name from the title deeds so not to get hit with the ADS charge but I think that's going to prove impossible as the mortgage lender would not grant the remainder mortgage to my ex wife due to her part time income (£10k pa max). Due to a child under the age of 16, I don't think a divorce judge would force sale of the house either. My ex point blank refuses this idea anyway, it's her home, it's my sons home and I feel I have an obligation to my son not make him homeless, it's where he has grown up and where he is comfortable.
So what on earth do I do, It's causing me quite a bit of stress and anxiety? I can't afford a £14k tax charge on a new property with my new family along with the 10% deposit, solicitors fees etc.
Options
I've worked out my share of the equity should be around £35k, my ex's about £55k (if adopting the £90k figure) - Forget my equity, hand it all over to my ex, take my name off the deeds but continue to pay the mortgage for the remainder of the term (As I can't remove my name due to ex's income)
This seems like a ludicrous idea to me, I'm losing all my equity that was built up during the time we were together and then a double whammy of having to be linked to the mortgage on the house for the next 13yrs or so remaining.
Seeing as this is an MSE forum, is there a way around the ADS charge?
If I remove my name from the deeds to my marital home and sign it over to my ex but continue to fund the mortgage provider, I will no longer own a property. I then buy a new property with my current partner and pay normal LBTT. A few months later I then add my name back onto the title deeds in the matrimonial home? Would ADS then apply to me doing that?
If so, then instead of 3% on £300k purchase (£9k), it would be 3% on the £175k value of my matrimonial home? (£5,250) or would it be 3% on the equity value that I own? (£35k which takes me under the £40k ADS threshold) or 3% of the mortgage balance remaining? I don't even know if this is an option, it may be against their rules to stop people flipping homes to avoid this charge, I have no idea?
I'm so confused. I would love nothing better to sell the marital home to avoid all this but I feel I don't have a leg to stand on forcing my ex and my son out of their home. In turn, I can't get off the mortgage, in turn, I'm stuck on the deeds and ADS applies. I see no end in sight.
Help
I own a home with my ex-wife, although technically still married, we split around 6 years ago. I moved out of the marital home and have settled now with a new partner and family. We haven't got around to divorce, more so to figure out what to do with the house that we own.
I want to buy a new house with my current partner and have run into the stumbling block of the ADS applicable in Scotland. The new house I want to buy will be in the £300k region so current rate of LBTT + ADS = £13,600 (£4,600 LBTT and £9k ADS)
The problem I have is my previous home. The house is worth around £175k with a mortgage outstanding of £85k. There's about £90k equity in the house. The £650pm mortgage amount still comes out of my bank account each month, my ex pays me £350 and the remainder £300 is my child maintenance contribution. She is in effect funding the whole £650pm mortgage. We have owned the house 12yrs, 6 yrs together, 6yrs separated.
I believe I would need to remove my name from the title deeds so not to get hit with the ADS charge but I think that's going to prove impossible as the mortgage lender would not grant the remainder mortgage to my ex wife due to her part time income (£10k pa max). Due to a child under the age of 16, I don't think a divorce judge would force sale of the house either. My ex point blank refuses this idea anyway, it's her home, it's my sons home and I feel I have an obligation to my son not make him homeless, it's where he has grown up and where he is comfortable.
So what on earth do I do, It's causing me quite a bit of stress and anxiety? I can't afford a £14k tax charge on a new property with my new family along with the 10% deposit, solicitors fees etc.
Options
I've worked out my share of the equity should be around £35k, my ex's about £55k (if adopting the £90k figure) - Forget my equity, hand it all over to my ex, take my name off the deeds but continue to pay the mortgage for the remainder of the term (As I can't remove my name due to ex's income)
This seems like a ludicrous idea to me, I'm losing all my equity that was built up during the time we were together and then a double whammy of having to be linked to the mortgage on the house for the next 13yrs or so remaining.
Seeing as this is an MSE forum, is there a way around the ADS charge?
If I remove my name from the deeds to my marital home and sign it over to my ex but continue to fund the mortgage provider, I will no longer own a property. I then buy a new property with my current partner and pay normal LBTT. A few months later I then add my name back onto the title deeds in the matrimonial home? Would ADS then apply to me doing that?
If so, then instead of 3% on £300k purchase (£9k), it would be 3% on the £175k value of my matrimonial home? (£5,250) or would it be 3% on the equity value that I own? (£35k which takes me under the £40k ADS threshold) or 3% of the mortgage balance remaining? I don't even know if this is an option, it may be against their rules to stop people flipping homes to avoid this charge, I have no idea?
I'm so confused. I would love nothing better to sell the marital home to avoid all this but I feel I don't have a leg to stand on forcing my ex and my son out of their home. In turn, I can't get off the mortgage, in turn, I'm stuck on the deeds and ADS applies. I see no end in sight.
Help
0
Comments
-
Aye, well: These things happen. Frankly ADS is usually but a minor expense in splitting up: my 1st divorce cost over £200k over 20 years ago. But paying one's lawfully due tax or duty is surely a patriotic duty?
Artful, on his 3rd successful marriage...
Slàinte mhath!0 -
You are not “technically” still married, you are legally still married.
As you’ve rightly pointed out I can’t see the mortgage lender agreeing to changing the names on the deeds but even if they did you’re taking about giving £55k of equity away in order to save £14k in LBTT. That doesn’t sound very MSE to me.
You don’t know for certain that in the event of a divorce your ex would get to remain in the property. Go and get some legal advice to find out. If you’re at the stage of wanting to buy a new property with your new partner you should probably be looking at getting divorced anyway. Did you know that your wife would still have a claim on your estate (ie your new home) and could prevent your partner making a claim should you pre-decease your partner. In fact your wife could outrank your son as well.0 -
Pixie,
Yes, I agree, the divorce needs to be a priority moving forward in order to protect my new partner and family. It's obviously the right thing to do anyway, it's just a case of always being put off due to financial reasons, solicitors fees + cost of divorce.
Something for sure I need to consult a solicitor about. I'm getting caught up in what constitutes a main residence and additional dwelling. In essence all it means is that you can't have your name on 2 properties at the same time regardless of circumstances.0 -
Did you ever find a solution? I'm in a similar position.
Six years ago at the age of 70 my Mum decided to put all her life savings into buying herself a house that she'd always dreamed of living in. Once the sale was complete her solicitor advised her to gift the property to my sibling and to me 50/50 with the property remaining in life rent for my Mum. 6 years on and I'm now looking to move home and the issue of ADS has come up as I am on the title deeds for my Mums property even though that is not my residence.0 -
Did you ever find a solution? I'm in a similar position.
Six years ago at the age of 70 my Mum decided to put all her life savings into buying herself a house that she'd always dreamed of living in. Once the sale was complete her solicitor advised her to gift the property to my sibling and to me 50/50 with the property remaining in life rent for my Mum. 6 years on and I'm now looking to move home and the issue of ADS has come up as I am on the title deeds for my Mums property even though that is not my residence.
There may be reasons we don't know, but that has the potential to cause further problems. Your Mum has given away her only asset, may have issues down the line with benefits / funding care ( look at gift with reservation) and has created a tax liability for you and your sibling.
It might be worth a complaint against the solicitor!0 -
Did you ever find a solution? I'm in a similar position.
Six years ago at the age of 70 my Mum decided to put all her life savings into buying herself a house that she'd always dreamed of living in. Once the sale was complete her solicitor advised her to gift the property to my sibling and to me 50/50 with the property remaining in life rent for my Mum. 6 years on and I'm now looking to move home and the issue of ADS has come up as I am on the title deeds for my Mums property even though that is not my residence.
Do you already own your current home ? And are you selling it to move ? If so ADS shouldn't be an issue since it works the same way as SDLT, in that there is an exemption for replacing your principal residence
If you don't currentiy own a home then yes this is an issue, I doubt you could usefully complain against your solicitor though because ADS didn't exist 6 years ago. Presumably this was all an attempt to avoid care home fees ? It could leave you open to CGT when your mum dies and you sell it though which would have been the case had your mum just left it to you in her will0 -
There may be reasons we don't know, but that has the potential to cause further problems. Your Mum has given away her only asset, may have issues down the line with benefits / funding care ( look at gift with reservation) and has created a tax liability for you and your sibling.
It might be worth a complaint against the solicitor!
Clients make their own decisions. Solicitors simply advise and undertake their clients wishes.0 -
I'm so confused. I would love nothing better to sell the marital home to avoid all this but I feel I don't have a leg to stand on forcing my ex and my son out of their home. In turn, I can't get off the mortgage, in turn, I'm stuck on the deeds and ADS applies. I see no end in sight.
Unfortunately it's not possible to walk away from ones responsibilities. You need to formalise your divorce from your ex as a very first step. With no financial consent order in place. There's no agreement to anything. Simply doing nothing is never advisable. As inevitably comes back to bite you.0 -
AnotherJoe wrote: »Do you already own your current home ? And are you selling it to move ? If so ADS shouldn't be an issue since it works the same way as SDLT, in that there is an exemption for replacing your principal residence
If you don't currentiy own a home then yes this is an issue, I doubt you could usefully complain against your solicitor though because ADS didn't exist 6 years ago. Presumably this was all an attempt to avoid care home fees ? It could leave you open to CGT when your mum dies and you sell it though which would have been the case had your mum just left it to you in her will
Yeah my Mum's main concern was always care home costs and that was what the solicitor based her advice on. At the time the advice my Mum was getting would have been correct. As you say ADS didn't exist and even if it did exist six years ago neither my sibling nor I had any intention of moving from our respective main residences again. It's caused a lot of hassle since though. It became an issue during my divorce case where my ex wife tried unsuccessfully to claim a quarter share of that house and instructed surveyors to do a valuation on the property and now with possible ADS liability.
I am selling my own house and my sons and I are moving to the new house so I really hope you are right. Our current house has some bad memories attached to it obviously and we all want to put the past behind us. The issue was flagged up by my sons fiancee who is a trainee solicitor and our financial advisor also advised it there could be an ADS liability late last night. My figures are tight as they are and the extra tax liability really would scupper the move.
When I read the Scottish Government pages on the ADS it's as clear as mud. It starts off pretty straightforward and the example given is that a housing developer can sell their main residence and buy a new main residence without liability. But then it goes on to talk about inherited houses which automatically are considered to be your main residence even if you don't live there. Anyway thanks for your help0 -
There's no need to hope that AnotherJoe is correct because AnotherJoe is correct. It's called the "Additional Dwelling Supplement" because you pay it when you purchase an additional dwelling. You are not purchasing an additional dwelling, you are replacing your current main residence with a new main residence. Your mum's house, or rather the house owned by you and your sibling, is irrelevant to the transaction.
In simple terms you currently own 2 properties and at the end of the transaction you will still only own 2 properties.
I cannot see how your ex getting a valuation carried out on your current home would make any difference to your ADS liability, or rather lack of it. Your mum is lucky that your ex isn't going for a share of the house she put into your and your sibling's names.
Your mum's little ruse to make the tax payer pick up the whole tab for any care she might need in the future may not work because if the council assess her as deliberately depriving herself of assets they will still take the value of the house into consideration. She may well land you and your sibling with a Capital Gain Tax bill in the future too. :T0
This discussion has been closed.
Categories
- All Categories
- 343.1K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.2K Work, Benefits & Business
- 607.9K Mortgages, Homes & Bills
- 173K Life & Family
- 247.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards