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SDLT on in-family house purchase
Puzzled_Sister
Posts: 3 Newbie
About 10 years ago my older brother (who is British but domiciled outside the EU and has no intention of ever returning to the UK) bought a buy-to-let investment property in England. He never lived in it and there is no mortgage on the property.
After several disastrous tenancies, the property had been so badly treated it was unlettable without major investment; new kitchen, new central heating system, new bathroom, total re-decoration and re-carpeting. So he offered to let me live there provided I restored the property. This I have done at my own expense.
My brother now wants to sell the property and has offered it to me (as the sitting tenant) at the same market value (£115,000) as it was when I moved nearly 4 years ago.
However, due to the restoration work and general house price increases, the current market value is around £170,000.
As he is not UK resident, we are not worried about IHT or CGT. But Stamp Duty Land Tax (SDLT) is a concern.
Has anyone any experience with HMRC in these circumstances? Will they come to me later re-assessing the property at the current valuation and looking for back taxes?
This isn’t an attempt to avoid SDLT, it’s just my wealthy brother helping me out. Any experiences or advice would be welcome.
After several disastrous tenancies, the property had been so badly treated it was unlettable without major investment; new kitchen, new central heating system, new bathroom, total re-decoration and re-carpeting. So he offered to let me live there provided I restored the property. This I have done at my own expense.
My brother now wants to sell the property and has offered it to me (as the sitting tenant) at the same market value (£115,000) as it was when I moved nearly 4 years ago.
However, due to the restoration work and general house price increases, the current market value is around £170,000.
As he is not UK resident, we are not worried about IHT or CGT. But Stamp Duty Land Tax (SDLT) is a concern.
Has anyone any experience with HMRC in these circumstances? Will they come to me later re-assessing the property at the current valuation and looking for back taxes?
This isn’t an attempt to avoid SDLT, it’s just my wealthy brother helping me out. Any experiences or advice would be welcome.
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Comments
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What is the purchase price? Is he charging you £170k?
In which case, you will pay stamp duty.
If he sold it to you for £125k, there would be no SDLT.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Hi Kingstreet. Thanks for your advice. He is charging me £115,000. This was the Market Value when I moved in.0
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In which case it's below the threshold, so SDLT neutral.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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You don't have to pay any SDLT for property purchases below £125,000. So nothing to pay
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It's only a concern if he's paying 115k for the house and 50k for his 1k car in order to avoid the stamp duty. Which he isn't doing, so it's fine.
I take it no agreement was in place stating you do it up and buy it for 115k as that may be seen as avoiding paying it. But if everyone is simply aware that you're simply buying the house cheaper off a family member because he is nice then I'm sure everything is good.0 -
Hello all. Thanks for all your advice. Looks like I've been worrying over nothing. My nice brother had expected me to live in it for many years, but now has changed his mind and decided to sell. Luckily, I can afford to buy. We had no agreement when I moved into the house regarding the improvements.0
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