Concessionary Mortgage- Stamp Duty

crystal1212

I bought a house from my sister recently. The market value is £310,000 which was given by Halifax surveyor. My sister agreed to give me gift of £62,000 from equity which is in turn worked as 20% deposit. There was no actual monetary transaction in relation to the gift.

Halifax offered me the mortgage for £248,000 (80% LTV). On mortgage offer Halifax put the purchase price as £248,000.
My Solicitor requested Halifax to change the purchase price as £310,000 but Halifax refused to change the purchase price saying that this is a concessionary mortgage as the applicant received a discount on market value.

My solicitor has calculated stamp duty on the basis of Market value £310,000 for which I paid £5500.

According to my findings I should have paid only £2460 as true purchase price is £248,000.

You valuable advice will be highly appreciated.

Dave_Ham

Your solicitor is wrong, ask them to double check before you complain formally.

Senior_Paper_Monitor

I'm with David (and we have done a handful of concessionary sales this year, as I suspect he has) - SDLT on transaction value not market value.

End of !

Bexm

Solicitor definitely wrong.

We are doing EXACTLY the same thing right now
.
Buying parent's house worth 310,000 for 150,000 (They have gifted us the rest) - We were told as long as the deposit was "gifted" this is how it works.
We confirmed all this beforehand with HMRC as we couldn't afford to pay £5500 stamp duty..!

Initially our mortgage offer said the purchase price was 310,000 but our solicitor actually told us to speak to them and get them to put the purchase price as 150,000, as that was the transaction amount so we'd only have to pay stamp duty on the 150,000.

So in answer.. you have over paid the stamp duty. Time to speak to the solicitor (and maybe HMRC?)

seaspray10

I'm buying a property from my son, market value 195k, purchase price 110k. My solicitors quote included SDLT based on 195k and the solicitor acting on behalf of my son said this was correct.
See below, response from HMRC.


On 03/02/2016 09:32, [EMAIL="stamptaxes.budget&financebill@hmrc.gsi.gov.uk"] stamptaxes.budget&financebill@hmrc.gsi.gov.uk[/EMAIL] wrote:

SDLT will be due if the total amount given for the property is exceeds £125,000. The amount given does not just include cash but other non-monetary consideration - see STLTM03700 for further details.

If this is an additional residential property the higher rates will apply to the total consideration as there is no threshold for the higher rates with the first £125,000 of the consideration being charge at 3%.

Regards

Jane

Jane Ewart | Policy Adviser | Stamp Taxes

TrickyDicky101

That would only be true were you paying additional consideration to your son. It is somewhat unusual for a parent to buy a discounted property from a son (parents tend to die before children) - why is he gifting you £85k (difference between property valuation and what you're paying)?

seaspray10

TrickyDicky101 wrote: »

That would only be true were you paying additional consideration to your son. It is somewhat unusual for a parent to buy a discounted property from a son (parents tend to die before children) - why is he gifting you £85k (difference between property valuation and what you're paying)?

Because I paid the deposit and all fees. My son put the mortgage in his name, as at the time it was easier as I’m self-employed. Now I’m in a position to pay off the mortgage and transfer the property into my name.
Yes, hopefully I will die before him and he’ll inherit it along with his sister.

TrickyDicky101

Then that could be construed that you are accepting the value of the property being gifted (£85k) to wipe out a debt your son owes you (ie the deposit).


That would then form valuable consideration on which SDLT is potentially payable.


That is not the same position as the OP.

seaspray10

TrickyDicky101 wrote: »

Then that could be construed that you are accepting the value of the property being gifted (£85k) to wipe out a debt your son owes you (ie the deposit).


That would then form valuable consideration on which SDLT is potentially payable.


That is not the same position as the OP.

My paying of the mortgage of £110,000 is a consideration but as the consideration is below SDLT level the tax doesn’t apply, as stated on the response received from HMRC.


It does clearly state this on the HMRC website, giving examples but as my solicitor wasn’t sure, I made a point of checking with them myself.


It does leave me wondering how many people have paid SDLT who shouldn’t have.

seaspray10

TrickyDicky101 wrote: »

Then that could be construed that you are accepting the value of the property being gifted (£85k) to wipe out a debt your son owes you (ie the deposit).


That would then form valuable consideration on which SDLT is potentially payable.


That is not the same position as the OP.

When I check I really check:


Dear Jane,

Thank you, you have been really helpful, so can I just confirm.

Even though the property market value is £195,000, the only payment I will make to pay off my sons mortgage is £110,000. If we complete this transaction prior to 30/3/2016 there will be no SDLT due, but if we complete after 30/3/2016, 3% SDLT will be due on the full purchase price of £110,000.

Kind regards


Dear Leigh


Yes , that's right.


Jane


Jane Ewart | Policy Adviser | Stamp Taxes| [EMAIL="jane.ewart1@hmrc.gsi.gov.uk"]jane.ewart1@hmrc.gsi.gov.uk[/EMAIL] | Tel: 03000 585790


Sent: 03 February 2016 10:17
To: Budget & Finance Bill, Stamp Taxes (CTIS)
Subject: Re: Stamp Duty question