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Buying a share in a property
Good_Money
Posts: 109 Forumite
A relative wants to pay off their mortgage and I have offered to give them the money in return for a 25% share of their flat.
They then intend to move abroad and we wish to rent out the property and receive income in our respective 75% / 25% share.
Will I be liable to pay Stamp Duty on the 25% share?
They then intend to move abroad and we wish to rent out the property and receive income in our respective 75% / 25% share.
Will I be liable to pay Stamp Duty on the 25% share?
0
Comments
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Will I be liable to pay Stamp Duty on the 25% share?
Depends on how much you are paying for the 25% share.
If the flat is worth over £500K and you are paying over £125K for a 25% share then you will have to pay SDLT.RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
Have you/your relative (esp your relative!) considered this fully?
1) At present R owns 100%. If the property increase in value by, say, £50K over time, that 50K belongs to them. Under this arrangement, only £37,500 is theirs.
2) if the property is rented, income tax is payable on the rent. The mortgage interest can be offset against tax. No motgage = more tax = less income.
3) What if in the future one of you wants your money back? Can you ask/force the other to buy your share? Or to sell the property?
Seems to me your relative would do better to move the mortgage to a buy To Let or get Consent To Let (CTL) from their lender, and just rent out their property.
You are getting a good deal out of this, but if you have your relative's interests at heart, you need to think this through together.
I've ignored your original Q as Richard has answered it.0 -
The 25% share would be 32,500 (value of property 130,000)
I would be happy to agree that if they wanted to sell in the future I would receive 25% of proceeds.0 -
Good_Money wrote: »The 25% share would be 32,500 (value of property 130,000)
I would be happy to agree that if they wanted to sell in the future I would receive 25% of proceeds.
I bet you would! You've got yourself a nice little investment there. Your relative is getting, well, a very bad investment.
I hope you don't like your relative. (though if so that bodes ill for being joint landlords)0
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