Complete Tomorrow: Stamp Duty Question?

fatmcgav

Afternoon all,

I'm hoping somebody can give me a quick answer here, as we're due to complete tomorrow...

We are in the process of purchasing my parents property, for a purchase price of £193,000.
As part of the purchase, my parents are gifting us a 10% deposit out of the equity on their existing mortgage.

We have signed up to a mortgage from Halifax, with an offer whereby they would pay our full stamp duty bill, as outlined here: http://www.lloydsbankinggroup.com/media1/press_releases/2013_press_releases/halifax/3004_stamp_duty.asp

However my conveyancers have informed me that Halifax are only going to pay 1% of the loan value of £173,700.
When I queried this with my mortgage broker, he advised me that Halifax indicated that the sale value of the property provided to HMRC should go down as the lower figure of £173,700, not the full purchase price of £193,000, due to this being a 'concessionary purchase', whatever that means...

My conveyancers have told me that this is incorrect, and the HMRC sale value must go down as £193,000. This leaves me with a shortfall of £193 for the stamp duty bill...Money that I haven't got as this late a stage in the process...

Who is correct?

Regards
Gavin

somethingcorporate

What does your broker say? Can he not have the discussion with the mortgage co?

GMS

Stamp duty is payable on the purchase price not the loan amount.

Clearly states in the link:

Designed to ease the burden for first time buyers making their way onto the property
ladder, 1% of the property price will be paid to solicitor on completion.

fatmcgav

somethingcorporate wrote: »

What does your broker say? Can he not have the discussion with the mortgage co?

Broker has had one discussion with Halifax, who informed him that the sale should go down based on the lower value.

However he is currently in a meeting, so am waiting on him to get back to me in response to my conveyancers feedback.

_GMS wrote:

Stamp duty is payable on the purchase price not the loan amount.

Clearly states in the link:

Designed to ease the burden for first time buyers making their way onto the property
ladder, 1% of the property price will be paid to solicitor on completion.

Ok, cheers for confirming on Stamp Duty.
And the wording of "1% of property price" was my understanding aswell...

Cheers
Gavin

TBagpuss

You pay stamp duty on the purchase price, so If the purchase price is £193,000 then I would expect you to pay stamp duty on that.

If you had £19,300 which your paretns gave to you and you then paid over as a deposit, then you had a further mortgage advance of £173,700.

If in fact your parents agreed to sell at an undervalue of £173,700 not £193,000 then the purchase price is £173,7000 and that's what you'd pay the stamp duty on. What do the contract and transfer deed say about the price?

fatmcgav

TBagpuss wrote: »

You pay stamp duty on the purchase price, so If the purchase price is £193,000 then I would expect you to pay stamp duty on that.

If you had £19,300 which your paretns gave to you and you then paid over as a deposit, then you had a further mortgage advance of £173,700.

If in fact your parents agreed to sell at an undervalue of £173,700 not £193,000 then the purchase price is £173,7000 and that's what you'd pay the stamp duty on. What do the contract and transfer deed say about the price?

TBagpuss, cheers for the response.

Yes, £193,000 is the agreed purchase price, and that is the price quoted on the Contract and Transfer deed.
However I've just checked, and the mortgage offer lists a purchase price of £173,700, which I guess is where Halifax are getting their information from

The 10% deposit is being transferred behind the scenes AFAIK, we as buyers are never touching the money, which I think is where the 'Concessionary Purchase' phrase has come from.

Regards
Gavin

StuC75

What is stated in the mortgage offer rather than just a press release.. The full version of that release states '
The first time buyer Stamp Duty offer is currently due to end on 7th July 2013'

Seems like because you are buying your parents property and they are 'gifting' the 10% deposit, and so Halifax are treating this as something outside of the 'normal'..

Have you actually received the 10% deposit from your parents or is it 'on paper' \ valuation work round?

It may be that they are 'both correct' in there assessment of the situation and conditions - but that putting the lower purchase price on the stamp duty could be treated as some kind of 'avoidance'..

Much may depend on how that 10% has been accounted for..

GMS

The mortgage offer has the wrong purchase price on and needs to be amended.

Your broker should have picked this up at the point of offer and so shoudl the solicitor.

Can't work off 2 different figures.

fatmcgav

StuC75 wrote: »

What is stated in the mortgage offer rather than just a press release.. The full version of that release states '
The first time buyer Stamp Duty offer is currently due to end on 7th July 2013'

Seems like because you are buying your parents property and they are 'gifting' the 10% deposit, and so Halifax are treating this as something outside of the 'normal'..

Have you actually received the 10% deposit from your parents or is it 'on paper' \ valuation work round?

It may be that they are 'both correct' in there assessment of the situation and conditions - but that putting the lower purchase price on the stamp duty could be treated as some kind of 'avoidance'..

Much may depend on how that 10% has been accounted for..

StuC75, there is no mention that I can find on the Mortgage offer of the paid stamp duty. However as mentioned on my last post, it looks like Halifax have put the purchase price down as £173,700, not £193,000. I'm guessing this is how they have manifested the 10% gifted deposit...

I was told by mortgage broker that the deposit would be taken care of at exchange time, so there was no need for us to actually receive the 10% deposit from parents...

Cheers
Gavin

fatmcgav

GMS wrote: »

The mortgage offer has the wrong purchase price on and needs to be amended.

Your broker should have picked this up at the point of offer and so shoudl the solicitor.

Can't work off 2 different figures.

GMS; dam, that's not what I wanted to hear on the day before due to complete

Will try and chase my broker now...

Cheers
Gavin

fatmcgav

Plot thickens

Having spoken further with my conveyancers, apparently she did pick up on the difference between the Title purchase price and the Mortgage offer purchase price and queried it with Halifax, and they said that the mortgage offer was correct, due to that being the value that will be passed through their client accounts...

So it looks like this is as a result of the gifted deposit skewing things

Now to try and fight with Halifax...