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    • James moore
    • By James moore 11th Mar 17, 7:18 AM
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    James moore
    Stamp duty on remortgage
    • #1
    • 11th Mar 17, 7:18 AM
    Stamp duty on remortgage 11th Mar 17 at 7:18 AM
    Hi all,

    I have 1 BTL property only in my name, I also have my main family house only in my name. I am remortgaging the family home and at the same time doing a transfer of equity so that it is in joint names with my wife. The outstanding mortgage is circa £280k.

    My wife own no other property and never has done.

    I have one solicitor telling me we just pay standard stamp duty which works out to be £300.

    I have another solicitor telling me that even though the BTL is only in my name, the law treats a marriage as a single unit and therefore my wife does already own the BTL. In this case by adding her on to the main residence she is effectively 'buying' a second property and there subject to the higher rate of stamp duty - which is £4.5k.

    Who is right!!??

    Thanks in advance.
Page 1
    • xylophone
    • By xylophone 11th Mar 17, 12:16 PM
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    xylophone
    • #2
    • 11th Mar 17, 12:16 PM
    • #2
    • 11th Mar 17, 12:16 PM
    The BTL is in your sole name and you are both the legal and beneficial owner.

    I don't understand how your wife can be considered an owner of this property as she has no legal or beneficial interest.
    • da_rule
    • By da_rule 11th Mar 17, 2:35 PM
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    da_rule
    • #3
    • 11th Mar 17, 2:35 PM
    • #3
    • 11th Mar 17, 2:35 PM
    Is she paying for the share? Any stamp duty is calculated on the value of the transfer. Therefore if she is paying less than £40k there is no stamp duty.
    • James moore
    • By James moore 11th Mar 17, 3:23 PM
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    James moore
    • #4
    • 11th Mar 17, 3:23 PM
    • #4
    • 11th Mar 17, 3:23 PM
    By adding her on to the mortgage she is taking liability for half the mortgage so is effectively "paying".

    The question is whether or not stamp duty is payable at the higher rate? The BTL is solely in my name but as we are married the solicitor says we are a "single unit".
    • xylophone
    • By xylophone 11th Mar 17, 3:39 PM
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    xylophone
    • #5
    • 11th Mar 17, 3:39 PM
    • #5
    • 11th Mar 17, 3:39 PM
    I really don't understand how your wife can be considered to own a property in which she has no legal or beneficial interest.

    Ring HMRC to query tax due.

    https://www.gov.uk/government/organisations/hm-revenue-customs/contact/stamp-duty-land-tax
    • sheramber
    • By sheramber 11th Mar 17, 5:10 PM
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    sheramber
    • #6
    • 11th Mar 17, 5:10 PM
    • #6
    • 11th Mar 17, 5:10 PM
    Whether you understand it or not that is what the Government have ruled


    https://www.stampdutycalculator.org.uk/stamp-duty-second-homes.htm

    Property Ownership

    Married couples & civil partnerships
    For the purpose of property ownership, married couples and civil partnerships are seen as one unit. This means that if one person already owns a property, any subsequent residential purchase by either person will be seen as an additional property for both individuals.
    • James moore
    • By James moore 11th Mar 17, 5:31 PM
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    James moore
    • #7
    • 11th Mar 17, 5:31 PM
    • #7
    • 11th Mar 17, 5:31 PM
    I wonder if that counts when I already own the property, just adding my wife on to the mortgage. I get what you are saying but it just doesn't seem right to me.
    • kinger101
    • By kinger101 11th Mar 17, 5:32 PM
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    kinger101
    • #8
    • 11th Mar 17, 5:32 PM
    • #8
    • 11th Mar 17, 5:32 PM
    I believe you won't have to pay the higher rate, as the text of the Finance Act 2016 is;

    Spouses and civil partners purchasing alone

    9(1)Sub-paragraph (2) applies in relation to a chargeable transaction if—

    (a)the purchaser (or one of them) is married or in a civil partnership on the effective date,

    (b)the purchaser and the purchaser’s spouse or civil partner are living together on that date, and

    (c)the purchaser’s spouse or civil partner is not a purchaser in relation to the transaction.

    (2)The transaction is to be treated as being a higher rates transaction for the purposes of paragraph 1 if it would have been a higher rates transaction had the purchaser’s spouse or civil partner been a purchaser.

    (3)Persons who are married to, or are civil partners of, each other are treated as living together for the purposes of this paragraph if they are so treated for the purposes of the Income Tax Acts (see section 1011 of the Income Tax Act 2007).


    So if you look at (2), technically the spouse would not have been subjected to the higher rate of SDLT as they are not purchasing an additional property. So ordinary rate SDLT will be levied based on the amount of debt transferred to the spouse.

    I would however get HMRC's take on this, and that of an accountant if their opinion is unfavourable.
    • POPPYOSCAR
    • By POPPYOSCAR 11th Mar 17, 6:15 PM
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    POPPYOSCAR
    • #9
    • 11th Mar 17, 6:15 PM
    • #9
    • 11th Mar 17, 6:15 PM
    Whether you understand it or not that is what the Government have ruled


    https://www.stampdutycalculator.org.uk/stamp-duty-second-homes.htm

    Property Ownership

    Married couples & civil partnerships
    For the purpose of property ownership, married couples and civil partnerships are seen as one unit. This means that if one person already owns a property, any subsequent residential purchase by either person will be seen as an additional property for both individuals.
    Originally posted by sheramber

    That has always been my understanding as well.
    • xylophone
    • By xylophone 12th Mar 17, 12:03 AM
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    xylophone
    It is obvious that currently the wife has no legal ownership of either property.

    She is living in a house owned by her husband who also owns another property which he purchased prior to the marriage.

    She is taking an equitable interest in the property she currently occupies with her husband who owns it.

    How can this transaction be counted as the subsequent purchase of a second residential property when she didn't originally have any interest in either?
    • sheramber
    • By sheramber 12th Mar 17, 2:07 PM
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    sheramber
    (2) states that the transaction is to be considered higher rate if it would have been a higher rates transaction had the purchaser’s spouse or civil partner been a purchaser.

    The wife is the purchaser therefore therefore if the OP was purchasing it , it would be a higher rate transaction, hence this is a higher rate transaction.
    • getmore4less
    • By getmore4less 12th Mar 17, 3:06 PM
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    getmore4less
    (2) states that the transaction is to be considered higher rate if it would have been a higher rates transaction had the purchaser’s spouse or civil partner been a purchaser.

    The wife is the purchaser therefore therefore if the OP was purchasing it , it would be a higher rate transaction, hence this is a higher rate transaction.
    Originally posted by sheramber
    I read it that if the OP(as spouse) was buying part of the house they already owned part of it would NOT be a higher rate transaction.

    That's the bit the wife is buying. Not a high rate transaction
    Last edited by getmore4less; 12-03-2017 at 5:34 PM.
    • bowlhead99
    • By bowlhead99 13th Mar 17, 7:09 AM
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    bowlhead99
    I read it that if the OP(as spouse) was buying part of the house they already owned part of it would NOT be a higher rate transaction.

    That's the bit the wife is buying. Not a high rate transaction
    Originally posted by getmore4less
    What you're saying is that the wife would avoid additional rate stamp duty if what she buys would not be an additional rate transaction if it had been done by the husband (which is what Kinger's extract says).

    But is it certain that if the husband had done it, it would not be an additional rate transaction? Purchasing additional interests in your own home, when you already have a home and another property, can be an additional rate transaction, can't it?

    E.g. if personal owns 50% of their residence that they have owned for years and 50% of a BTL that they have owned for years. Then they have some spare money so decide to buy another 50% stake in one of them. I assumed whichever one they decided to buy the 50% in, it would be an additional rate transaction. If they get their spouse to do the purchase instead, it would still be an additional rate transaction.

    So, just because you own part of a home and want to add a bit, or want your wife to add a bit, doesn't mean it wouldn't be a higher rate transaction.

    The nuance here is that the person already owns 100% of their residence and is not trying to add another 50%. If the OP sold his main residence completely and then bought 100% of it back again the next day, it wouldn't be a high rate transaction, because you are allowed to replace your main residence without paying higher rate stamp. So, you would hope it would stand to reason in the spirit of the rules that if the OP sells just 50% of is main residence and then he (or his wife) buys it again, you would not expect it to be a higher rate transaction.

    Effectively the 'family unit' of husband and wife have simply disposed of a part of their main residence (husband selling it) and rebought the exact same part of the main residence (wife buying it). If you can get a 'relief' or 'exception' by disposing of the entire main residence and then buying a new main residence while keeping the BTL untouched, one would hope you could get the same treatment on selling a bit of you main residence and then re-buying it again; you are still left with 1 main residence and 1 BTL.
    • booksurr
    • By booksurr 13th Mar 17, 11:48 AM
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    booksurr
    the HMRC guidance and examples that I have seen do not directly address the OP's precise scenario and therefore I do not think anyone in this thread can say with certainty whether SDLT is or is not liable at the higher rate as aspects of the guide can be applied to support either outcome
    But is it certain that if the husband had done it, it would not be an additional rate transaction? Purchasing additional interests in your own home, when you already have a home and another property, can be an additional rate transaction, can't it?
    Originally posted by bowlhead99
    actually the guide does expressly state that the purchase of an additional share in a property you already own is NOT a higher rate transaction.

    3.12 The interest held at the end of the day must be an interest in another dwelling. A further interest owned in the same dwelling in which a major interest has been purchased will not, on its own, cause Condition C to be met.


    Given that, the rest of Bowlhead's post is pure speculation as "the spirit" of the law is not "the law" and therefore whatever anything thinks is in keeping with the spirit does not make it lawful
    • bowlhead99
    • By bowlhead99 13th Mar 17, 4:09 PM
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    bowlhead99
    Given that, the rest of Bowlhead's post is pure speculation as "the spirit" of the law is not "the law" and therefore whatever anything thinks is in keeping with the spirit does not make it lawful
    Originally posted by booksurr
    Yes, it was speculation, as in, "based on this you'd think there are various angles which could be helpful in determining how this should work to support what you're trying to achieve", if you are looking to get a solicitor to see things your way. And thanks for the excerpt.

    My post was really supposed to be to the effect of -maybe not well communicated- that, as you say, the HMRC guidance doesn't give this case as an explicit example, so you'd have to follow all the various rules and exceptions to come to a logical conclusion. And so, it might not be as simple as the person to whom I was replying had done which was simply stating: "Not a high rate transaction".

    With the excerpt you quoted that buying a piece of a property when you already own a "major" part of it is not liable for extra rate, it would seem you shouldn't get a worse result than that in the case where your spouse buys it instead of you. Especially if the husband and wife spousal unit, via the wife, is just buying back a piece of their main residence which had been sold same day by the husband, and we know you are allowed to sell a main residence and buy another without paying higher rate on that.

    So, my guess (which of course isn't definitive) is that you are ok with standard rate applying here. But for clarity, OP can ask a solicitor to send a carefully worded question to HMRC in advance of the transaction to clarify understanding. Or gamble on putting the forms in at basic rate and hoping HMRC don't view it differently.
    • kinger101
    • By kinger101 13th Mar 17, 8:39 PM
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    kinger101
    Acutally, reading FA2016 again, it specifically refers to "another dwelling". So the husband cannot technically be counted as replacing their residential property according to S128(6)(b).

    It would seem to me given the scenario is absent for the guidance notes that perhaps they had not envisaged circumstances. I'd personally contact HMRC at this point. I'm sure they've had this raised since the new rules came into force.

    I'd probably write to the SDLT office and get whatever they answer in writing.

    https://www.gov.uk/government/organisations/hm-revenue-customs/contact/stamp-duty-land-tax

    I wouldn't get a conveyancing solicitor involved. Very few understand the rules in any depth. If you want to engage the help of a professional, use a tax accountant or a chartered taxation consultant.
    • James moore
    • By James moore 21st Mar 17, 4:14 PM
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    James moore
    To confirm both my solicitor and accountant confirmed it is the higher rate that is applicable.
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