Stamp Duty and Shared Ownership

monkeymonkeyrarara

Hi all,

I bought a 50% share of a flat for £65k 2 years ago and was told by the Housing Association it was priced to be under the stamp duty threshold. The purchase got right to the last at which point my solicitor said I needed to pay £500 stamp duty on the value of the rent I pay to the HA.

Most of my neighbours did NOT pay stamp duty at all. Is ther anything I can check or do to see about getting this money back?

Thanks for your help in advance.

llh189

Hi,

I got to exchange on a shared equity place last year, the purchase price was 165k my share be 50%. At the time the property was above the stamp duty threshold.

I had a mortgage of 78K and paid a deposit of 5K, all the legal papers were practically complete at no time was I expected to pay stamp duty - the purchase was stamp duty exempt even though it was above the threshold.

I think that you have been given duff advice - I would firstly check with your HA they should be able to give you correct advice. I would then write to your Solicitor asking for proof that he paid over the monies correctly, and you will be seeking to get the money refunded from HM Customs and Duty.

You should be able to google some numbers for them. I would then seek their advice about getting a refund from them.

Richard_Webster

The law has changed recently - I'm not sure when this was and OP may have been caught by the old law. The exemption from any SDLT under £125K (now £175K) only used apply to new leases (which SO transactions often are) when the rent being paid was less than £600 pa and usually the rents were well over that level.

You had and still have a choice of paying SDLT on the share you buy or on the market value. If you pay on the market value straight away then you don't have to pay any more when you buy further shares.

If you bought 50% of an SO property worth £120K you had a choice of paying on your share - £600 - 1% because rent over threshold or SDLT on a property with no rent at £120K - which as it was under the threshold was therefore nil.

If 100% of the property was worth £130K then you had a choice of paying £650 or £1,300 so if you were fairly sure you were going to buy a further share in the proeprty and wanted to minimise the SDLT payable later you would pay the £1,300, if not you would have the cheaper option of paying £650. For those buying slightly cheaper properties up to £125K full value it was a no-brainer - they simply opted to "pay" on the full value - which was nothing. This maybe explains why some people OP knew didn't pay any tax.

There are even more complicated factors which come into play when values go over the 3% threshold at £250K. Basically, unless you "pay" on the whole value at the start, HMRC treat the later acquisitions of shares as part one big transaction and calculate SDLT on the total amount spent in acquiring the property. I won't go more into that now as it is a minefield.

Since the change in the law the rent element is disregarded in working out SDLT on shared ownership leases, so if the share you buy costs less than the current threshold you don't pay anything at all.

The upshot of al this is that OP may not have been wrongly advised, although I don't understand where a figure of £500 comes from.

monkeymonkeyrarara

Ok, thanks for your replies. Much appreciated.

If I'm right, my solicitor did not give me the option of paying on the value of the property (which was below the threshold), rather than the value of the rent. Instead she simply said I had to pay the £600 before the sale went through.

Can I therefore go back to them and say that I want this back as I would automatically have chosen the cheaper option?