Avoiding +3% Stamp Duty

davidmcn

Pixie5740 wrote: »

I bow to booksurr's greater tax knowledge. It does seem bonkers that there is a difference in what qualifies as a married person's PPR for SDLT and CGT but I am not shocked if that is the case.

It's not so much that there's a different definition of what your principal residence is, but the fact that you also have to be selling it (and buying a new one) for the relief to apply.

_CC_

booksurr wrote: »

relates to CGT not SDLT

booksurr wrote:

OK I did misread that, you are liable for the +3% because your wife is going from 1 to 2 and is not replacing her main home given she has no claim to ownership of that as it is the one being sold

"The government will treat married couples and civil partners living together as one unit. This is consistent with other areas of the tax system including Capital Gains Tax private residence relief where married couples are entitled to relief on one residence between them.

This means that:

• married couples and civil partners may own one main residence between them at any one time for the purposes of the higher rates
• property owned by either partner (and any minor children) will be relevant when determining if an additional property is being purchased or not. Therefore, an individual buying a property may be liable for the higher rates if his or her spouse or civil partner has an existing residential property. If the spouse or civil partner then sells that residential property they may be able to claim a refund

https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

pollyanna24

kbutler321 wrote: »

Yes we did! Did we not need to? They are still officially on the mortgage and deed (which credit ratings and searhces would've identified) even though they don't pay mortgage or live there!

So they don't live there and don't pay for it, but want to get whatever they can when it eventually sells?

Berger_3

The government’s view is that any elective treatment for SDLT may reduce uncertainty but it would be open to abuse and on balance is not justified. Instead, the government proposes that whether a property is a main residence will be based on fact.
HMRC will take into account a number of factors when considering whether a given property is an individual’s main residence. These will include:

• where the individual and their family spends their time;
• if the individual has children, where they go to school;
• at which residence the individual is registered to vote;
• where the individual works;
• the location and degree of furnishing and location of moveable possessions; and
• the correspondence and registration addresses given to various organisations.

In most cases the position will be clear and few factors will need to be considered. For example, where a married couple own two properties, one of which is convenient for their work and their children’s school and where they spend most of their time, and a holiday home which they visit occasionally, the former property would be their main residence.
The government proposes a two stage test to determine whether a purchase of a residential property is a replacement of a main residence or not. The first is whether, at the time of the transaction, a property sold in the last 18 months was the only or main residence of the individual. The second is whether the purchaser of the new property intends to occupy that property as their only or main residence.
When considering the first stage of the test, the property being sold must have been the only or main residence of the purchaser at some point in the 18 months before the purchase of the new property. In the majority of cases, an individual owns only one residence throughout a period, and it is this residence that will be their only or main residence.
Where an individual has more than one residence, which of these was their main residence will be a question of fact.
The second stage of the test is prospective and based on whether the purchaser intends to use the newly purchased property as their only or main residence. Where an individual has made plans at the date of purchase to move into the new property as their only residence, it will be obvious that the intention test is met.
Where evidence clearly shows that either another property will continue to be their main residence or that the property is purchased for some other purpose (such as use of a buy-to-let mortgage or other evidence of an intention to market the property for rent) the transaction will not be a replacement of a main residence.

This in relation to main residence - there is no mention of actually being on the deeds/mortgage etc, or is this just assumed?

lovinituk

Doh! So its still not clear!!

Those posts by _CC_ and Berger3 seem to back up what I originally thought and that we will be exempt!!

I think I'll wait and phone HMRC after the budget.

lovinituk

If it does come down to her needing to be on the deeds (and therefore it becoming her main residence) then we can revert to Scottishblondies solution of doing a deed of variation to add my wife to the ownership of the house.

My lender charges £195 for that plus whatever solicitor costs - far cheaper than an extra 3% of stamp duty!

marksoton

lovinituk wrote: »

I think I'll wait and phone HMRC after the budget.

Good luck with that!

lovinituk

marksoton wrote: »

Good luck with that!

Haha, yes you are probably right!

marksoton

lovinituk wrote: »

Haha, yes you are probably right!

Heres how it'll go....

Ring ring.... "Your call is important to us/we're currently experiencing high call volumes"....

45 minutes later.....

"oh hello, i'd like to ask a question regarding the new SDLT liabilities.."

" Ummmmmm......."

lovinituk

marksoton wrote: »

Heres how it'll go....

Ring ring.... "Your call is important to us/we're currently experiencing high call volumes"....

45 minutes later.....

"oh hello, i'd like to ask a question regarding the new SDLT liabilities.."

" Ummmmmm......."

8am is a good time to call so it will actually be like this...

Ring ring.... "Your call is important to us/we're currently experiencing high call volumes"....

5 minutes later.....

"oh hello, i'd like to ask a question regarding the new SDLT liabilities.."

" Ummmmmm......."