Stamp Duty - Shared ownership

Paji1034

Solicitor is still finding what was completed with respect to STDL...

I am just wondering of it is possible I can sell 25% share which in my sole name and buy 100% share at the same time in my name and my wife name....

Would it be possible...

kingstreet

I think the obvious question would be, why?

You are conducting a transfer of equity on the share you already own to include your spouse. For that you need your existing lender's approval, or you remortgage to a new lender in joint names and complete the TofE and staircasing up to 100% at the same time.

Richard_Webster

If at the time the SDLT level for FTBs was £250K then the solicitors would have been negligent in not opting for the market value. Very often the SO lease will set out the choice made at the time - so have a look at that.

martinsurrey

00ec25 wrote: »

an EA is not qualified to advise on SDLT, you need to check with a solicitor

you opted to pay SDLT in stages. The property value is irrelevant. if you now buy the remaining 75% you go over the 80% threshold and what you have not understood is that the 25% + the 75% are LINKED TRANSACTIONS so they are added together to give the total "consideration" paid to date for the property. SDLT is payable on the consideration given, not the "value" of the property, so

you bought 25% and paid 140 x 25% = 35,000. Obviously £35,000 was below the threshold so you paid £0 SDLT

75% will cost you 125,000 x 75% = 93,750
you already paid 35,000

so your total consideration paid is 93,750 + 35,000 = 128,750, This is > the SDLT threshold so you will be charged 1% on 128,750

if you want to avoid SDLT you need to negotiate a discount on the price and get the 75% for less than 90,000

Wrong in a small but important part.

As this was no doubt bought through an approved scheme (An HA) you need to ignore the normal linked transaction rules and look at the guidance specifically for approved shared equity stair casing.

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm#2

SDLT on staircase transactions - further examples
Example one.
SDLT is charged on each staircase by reference to the consideration for that "jump" at the rate applicable to the current total consideration paid.

So in this case it would be 1% of £93,750 (75% of £125k) or £937.50 in stamp duty, as the total relevant consideration is £128,750 (over the 1% limit).
You could reduce the amount of STLD payable to virtually £nil if you staircase to 95% and then to 100%.
This is because to get to 95% you need to buy 70% of the house which would cost £87,500 (125 X 0.7) which added to the £35,000 you’ve already spent takes you to £122,500, still under the stamp duty threshold.

Then to get to 100% you buy the last 5% for £6,250 and pay stamp duty on this at 1%, or £62.50.

But the legal fees for 2 staircases would more than likely cost more than the stamp duty saved, so would be a bad idea for you, but can be, and is, used by people to avoid the jump from 1% to 3% on ~270k shared equity houses.
All of the above is hopefully irrelevant for you though, as if your original solicitor knew anything he’d have done a market value election and used the FTB exemption, meaning no stamp duty will ever be payable.

I just wanted to clear that up incase anyone else read it and got confused.

Paji1034

Got reply from solicitor. Unfortunatley, my solicitor did not opted for the market value and they just fill SDLT on the initial 25% share. So I will have to pay SDLT.I have paid out all mortgage on 25% share so no mortgage is outstanding. It seems it might not be possible or will be expensive if I sell 25% and then buy 100% in joint names.Any ideas what to do......

martinsurrey

Paji1034 wrote: »

Got reply from solicitor. Unfortunatley, my solicitor did not opted for the market value and they just fill SDLT on the initial 25% share. So I will have to pay SDLT.I have paid out all mortgage on 25% share so no mortgage is outstanding. It seems it might not be possible or will be expensive if I sell 25% and then buy 100% in joint names.Any ideas what to do......

pay the stamp duty of £937.50 is the only real, and more than likely, cheapest option

Paji1034

Thanks for all help....

Lilly_Tam

I am looking to staircase up to 100% but have just found out that I could potentially save on stamp duty if I do it in two stages - 80% then 100%.

My flat is in London and has just been valued at £375k.

I currently have a 40% share and the mortgage outstanding on that is £74k (with the Nationwide). The initial purchase was in October 2005 (total value of flat back then was £237,500) and I paid 1% stamp duty on the £95k paid for the 40% share.

I can also put down around £20k to £23k in deposit depending on remortgaging expenses.

In terms of future plans, I definitely plan to staircase up to 100% eventually as my flat is in a very good location, right next to a zone 1/2 tube and overground station, and its value is going to keep rising.

Any thoughts or advice would be much appreciated!

Thank you

Lilly

Kynthia

I cant see what your question is. However you are more likely to get a response if you start your own thread instead of digging up every old shared ownership thread you can find.

Lilly_Tam

Done.

Many thanks Kynthia!

Lilly