Avoiding stamp duty on house purchase.

eeja

Below is headline in the Times today but they omitted to raise and answer the most obvious question.
Namely, can one save stamp duty tax by using this method .
If so, tens of thousands of pounds could potentially be saved. There is a 4% tax on the purchase of properties over £500k.
Anyone know the answer ?

''Number of house swaps rise by more than 400 per cent in a year''

DemiDee

Interesting but I'm not sure of the answer.

isofa

I doubt it, surely the swap requires a change of ownership, which must be considered a sale, and therefore stamp duty is applicable. Only if the people don't "sell", and still own each others houses, is stamp duty not due.

I suppose each could sell the houses to one another for a nominal fee, under the stamp duty threshold, but not sure of the legality.

Gwhiz

I'm pretty sure this will not avoid stamp duty. Each transaction, even as a swap, will be costed for taxation purposes.

DemiDee

As far as I'm aware, stamp duty only becomes an issue if you are buying for 125K - 250K, and even then, it's only 1% - much better than it used to be (we paid stamp duty on our house, bought in 2002, when it was just £70K).

IMHO, if you are buying for more that 250K, then surely you can afford the little extra stamp duty. That said, we seem to be double taxed on everything these days, including death!

isofa

DemiDee wrote: »

As far as I'm aware, stamp duty only becomes an issue if you are selling for 125K - 250K, and even then, it's only 1% - much better than it used to be (we paid stamp duty on our house, bought in 2002, when it was just £70K).

IMHO, if you are selling for more that 250K, then surely you can afford the little extra stamp duty. That said, we seem to be double taxed on everything these days, including death!

The buyer pays stamp duty, not the seller.

up to 175K until 2nd Sept 2009 = 0%
£175,001 to £250,000 = 1%
£250,001-£500,000 =3%
£500,001+ = 4%

With most 4 bedroom houses around here way over 250K and many 500K+ it's a not insignificant additional fee to find, yet another unjust tax.

soulsaver

Its that stealth taxation again: In the 90s in the last 'crash' swaps only attracted stamp on the difference in value -so if the diff was under £65k(?) no liability for duty.
My understanding now is stamp is due on the value - if you swap 2 houses of say 180k value both parties will be 'deemed' by HMRC to have sold and bought, so both will be liable.
And of even more stealth: I believe if you buy a share in a house of an existing owner you'd be liable for stamp for the full value of the prop. So say you decide to help you ageing mum (aunt, uncle etc.) and buy a quarter share in her £250K house - you'd be liable for SDLT on the whole £250K! How fair is that?

Money_Grabber13579

Soulsaver - Tax is never fair! lol

DemiDee

soulsaver wrote: »

So say you decide to help you ageing mum (aunt, uncle etc.) and buy a quarter share in her £250K house - you'd be liable for SDLT on the whole £250K! How fair is that?

That's really disgusting. I wasn't aware of this. However, this country is in such a state of apathy that the government can push anything through and nobody gets up in arms about it. Sure they're putting something in the water :-)

uk_steve

soulsaver wrote: »

say you decide to help you ageing mum (aunt, uncle etc.) and buy a quarter share in her £250K house - you'd be liable for SDLT on the whole £250K! How fair is that?

thats bad!!

G_M

Tax is never fair! lol

Until you need a public service. I'm only alive today because of the (expensive) cancer treatment I've received on the NHS over the last 3 years. If I lived in the States and didn't have insurance I'd be dead.

As it is the NHS has been fantastic - thanks to funding from our taxation system.

Don't get me wrong: there are flaws in both the tax system and the NHS, but what process or large organisation doesn't have flaws? Thank you, guys, for helping keep me alive.......