Interesting, and complicated!

spr_3

Hi all,

I really need some advice from someone other than my solicitor, mortgage advisor, 'father-in-law', etc. etc.!

The situation is this;

Back in March we sold our house and moved in with my g/fs dad (Stan).

Stan's other daughter (Samantha) took over posession of the house (with deeds & Mortgage) after he retired (a couple of years ago). There was a special clause put into the purchase whereby Samantha could only sell the house as long as my g/f (Kerry) agreed.

We have now decided to make the most of the fact that Kerry has the right to approx 50% of the house and offered to buy Samantha out, thereby becoming the owners of the whole property.

We had the property valued at £140,000 and agreed to pay Samantha £65,000 to buy her out (Samantha had agreed to the £10,000 discrepancy).

We went to a mortgage advisor who has been very good really. The Mortgage advisor came up with a mortgage that suited us and we were accepted.

That was about 8 weeks ago and I have just found out (last week) that our solicitor has done nothing. A few weeks ago they sent us some forms in the post, however they were damaged in the post and unreadable. I phoned and emailed our solicitor to send us a new copy, this still hasn't arrived.

Late last week I received an 'introductory' letter from our solicitors thanking us for using them in the purchase and outlining the costs and fees!

I also found out that after 8 weeks or so, they hadn't even started the searches and because they hadn't re-sent me the forms I had no idea where they were up to (The solicitor (a personal friend) was off ill).

It was at this point that I also realised that they were working on the valuation of the house as the sale price, which is completely incorrect, to keep it simple we are paying £65,000 for a house that is worth £140,000 but they are now telling us that we have to pay stamp duty on £140,000.

Apart from the issues of the slowness of the solicitors, can anyone enlighten me as to if we should be paying this much stamp duty?

Am I looking at this too simply or what?

Many thanks for any and all advice.

Steve

leftieM

I don't know if this will help but 5 years ago my sister-in-law bought my husband out of his share of their house. The house was valued at 75k at the time (the stamp duty threshold was 60k at the time). I'm almost certain she didn't pay stamp duty.

drowningnotwaving_2

No expert, but I would have said you would have to pay stamp duty on the full value.

Isn't it the same as buying a house for £300k, only having a mortgage for £150k but still having to pay stamp duty on whole value? Don't know. Stamp duty makes me SOOO angry!!

steve700

I would have said that if the agreed sale price of half the house is £65,000 then that's what you would pay stamp duty on..........

regularsaver1

I's agree that would have to pay stamp duty

did she live there as main residence too?

steve700

drowningnotwaving wrote:

No expert, but I would have said you would have to pay stamp duty on the full value.

Isn't it the same as buying a house for £300k, only having a mortgage for £150k but still having to pay stamp duty on whole value? Don't know. Stamp duty makes me SOOO angry!!

The mortgage doesn't come in to it, does it?

This would effectively be a £140,000 house that the buyer has agreed with the seller to pay £130,000 for (make the seller an offer at a lower price than advertised, etc).

regularsaver1

Yes but steve700 - this may have to follow same rules as chared ownership. say someone only borrowed 50% share equalling 70% but their rent on the remaining 50% was over £600 a year - they still pay stamp duty on whole property price rather than their share I believe

Solicitors are very hot on this at the moment. Advice can be sought from land registry

Gorgeous_George

I think the house belongs 100% to your sister (from what I have read). As such, you are buying 100% of the house and therefore liable for Stamp Duty on £140K (or £130K if that is the final sale price).

I also think your sister could expect the full £130K as the house bvelongs 100% to her. There could be an issue wuth gifting of half the value of the house to your g/f.

Of course, if it is more complicated than I have gleaned from the info provided, you may need to speak to an expert (or post on the Cutting Tax forums).

Good luck.



GG

regularsaver1

I was thinking stamp duty also GG if this was not sisters main residence

silvercar

sounds like the house was put in Samantha's name (inheritance tax reasons?) so she technically owns the house. In accordance with the father's wishes, the house is probably in practice considered to be jointly owned. therefors Samantha is happy to be bought out for £65k.

As far as legalities are concerned Kerry is buying the house with a gifted deposit from Samantha. Your mortgage broker should be made aware that the deposit is gifted; some lenders are not too happy with this.

All the above is totally legal (presuming I have understood it correctly). The only problem may occur if the father dies within 7 years of giving his home away - inheritance tax issues, or the father needs to move into residential care - the local authority may consider that he has deliberately given away his home to avoid having to sell it to pay for his care. These are problems that may arise as and when, they do not affect your proposed transaction directly.

Bossyboots

GG is right, the transaction as described means that the sister is gifting half the property.