Do u pay stamp duty on Shared Ownership?

united4ever

The housing association have told me I have to but a few solicitors thought I could avoid it. Full flat price £175 000, buying 60% at £105 000. It's not a disadvantaged area.

I might take it up with the housing association. Can anyone give a definitive answer? Thanks

magyar

Your solicitors are right, according to this web site at least...

http://www.mortgages.co.uk/shared_property/how-to-buy.html

However, another web site suggests that "You will need to check with your solicitor or licensed conveyancer whether Stamp Duty is payable at the time of purchase. This is tax on the transfer of property. If it is payable, you can either pay the duty on your share of the property or on the total value of the property. Your solicitor/licensed conveyancer will advise you on the best option to take."

Concensus on a few other web sites suggests that you are required to Stamp Duty only if your share is worth less than the threshhold.

Bargain_Rzl

My understanding is that Stamp Duty is payable if the full market value of the flat is over the threshold. So in your case it is definitely payable, though you can opt whether to pay it on the whole value or simply on the share you're buying now.

My recently purchased SO flat is in a disadvantaged area (threshold £150k) but my flat is only worth £145k so I didn't have to pay it. I queried this point in some detail with my solicitor because I had got the impression from others on this board that stamp duty was ALWAYS payable on shared-ownership.

kebl0826

Bargain_Rzl wrote:

My understanding is that Stamp Duty is payable if the full market value of the flat is over the threshold. So in your case it is definitely payable, though you can opt whether to pay it on the whole value or simply on the share you're buying now.

My recently purchased SO flat is in a disadvantaged area (threshold £150k) but my flat is only worth £145k so I didn't have to pay it. I queried this point in some detail with my solicitor because I had got the impression from others on this board that stamp duty was ALWAYS payable on shared-ownership.

A good 30-40minute trawl of the inland revenue website and I can confirm that this is correct! The only way out is if you are in a disadvantaged area.

Damn, I hate Gordon Brown - bl***y greedy grasping so-and-so. Looking forward to voting him out at the next election.

lynzpower

Actually it doesnt matter whether the peoperty is in a disadvantaged area at all.

My SO flat is in a disadvantaged area.

the issue is that there is more rent to pay than ground rent and therefore it means that the stamp duty is payable. Its payable on ll SO flats due to the rent portion. UNLESS the rent is less than 600 pa ( peppercorn/ ground rents)
or you are buying a major share Id imagine where the rent is less than 50 pcm

Here- found it
http://www.hmrc.gov.uk/so/dar/dar-consideration.htm

http://www.hmrc.gov.uk/manuals/sdltmanual/SDLTM27080.htm general FAQs on SO

Bargain_Rzl

Think it's:

If full market value is UNDER the threshold then the rent value is immaterial. Mine's £145k total (my share is £58k). Yours (lynzpower) is well over, isn't it?

If full market value is OVER the threshold then rent value comes into play and stamp duty will always be payable regardless of how little the purchased share (the "premium") costs. So if I'd bought the flat upstairs for £151k, I'd have had to pay it.

As I say, I checked this several times with my solicitor - though I'm not emptying my budget until I'm certain the IR haven't written back to him telling him he's wrong . I quote my query, relating to the property report my solicitor sent me:

"Paragraph 3.1, Stamp Duty Land Tax, states that the property is in a designated disadvantaged area and the full market value does not exceed £150,000, therefore no stamp duty is payable. Various recent shared-ownership purchasers had led me to understand that in a shared-ownership transaction, if the annual rent exceeded £600 then stamp duty was payable on the full value of the property regardless of whether the total property value fell beneath the stamp duty threshold. Could you please seek additional confirmation from *****?"

And the response:

"***** has checked your email and cam confirm that stamp duty is NOT payable as stated in our report.
Please still sign and return the stamp duty form as this will still need to be sent to Inland Revenue."

(I did also read those links on the IR website before querying it...)

lynzpower

Yes, the value of mine was/is well over .

I dont know I wish there was something more categoric about this, really does seem to be a jumble

Bargain_Rzl

I totally agree, Lynz!

However, in terms of this particular thread, I think we're all in agreement that the OP will be liable for Stamp Duty because the total market value of the flat is in excess of the relevant threshold anyway.

Tassotti

is the SD proportional to the SO ie own 40% of property, pay 40% of SD

Bargain_Rzl

If your SO property is liable for SD you can opt to pay it either on the initial premium or on the full value of the property. If you choose the former, then you obviously have to pay additional SD when you "staircase" to a greater share in the ownership of the property.

I *think* (and not having had to pay it myself, I'm not sure) that if you only pay your proportion, there's an additional proportion payable based on a percentage of one year's rent. But I can't remember.

lynzpower

As i understand this riddle

If you do what I did and pay the SD only on the propertion you buy. If/when you want to buy extra shares, those shares get valued at "current rate" and you pay the SD on that - not what it would have been if you had paid all the SD at the beginning.

I hadnt heard about the "extra rent thing" bargain says but in fairness I wasnt paying *that* much attention

What happens if the place loses value I dunno