looking to buy - Stamp duty concern

Arthritic_Toe

pablogp wrote: »

Afternoon,

I was wondering if someone could help me.

I'm looking to purchase a property with my wife...

No - you'll have to use money. You can't really offer wives in payment anymore.

AdrianC

pablogp wrote: »

Correct, inherited house is currently my primary residence and the new house will also be.

Then you would be able to reclaim the 3%, except...

I would not be selling my half share

^ for that bit.

and as you state I believe I would be liable to the extra 3% stamp duty which is fair enough.

Great. So we're all happy that - as the soon-to-be owner of multiple properties, you are exactly the intended target of this SDLT scheme, and that you should be paying it.

Oh, wait a sec... There's a "but" coming, isn't there?

If I were to pass on my share of the inherited house to my unborn daughter, from my understanding that would make me exempt from paying the additional 3%. Is that correct?

You could form a trust in the name of your child, once they're born, into which you could pass ownership of your half of the property as a gift. Trustees would need to be appointed - you and your sister would be the obvious choices. As trustees, you would then be legally bound to manage that property in your daughter's best interests. These would not include gifting it back to you, obviously... She may wish to do that herself - once she's 18yrs old and can take ownership for herself, but...

pablogp

AdrianC wrote: »

Then you would be able to reclaim the 3%, except...


^ for that bit.



Great. So we're all happy that - as the soon-to-be owner of multiple properties, you are exactly the intended target of this SDLT scheme, and that you should be paying it.

Oh, wait a sec... There's a "but" coming, isn't there?


You could form a trust in the name of your child, once they're born, into which you could pass ownership of your half of the property as a gift. Trustees would need to be appointed - you and your sister would be the obvious choices. As trustees, you would then be legally bound to manage that property in your daughter's best interests. These would not include gifting it back to you, obviously... She may wish to do that herself - once she's 18yrs old and can take ownership for herself, but...

thanks, all very useful.

kinger101

For anyone trying to come up with clever schemes to avoid tax, there are general anti-avoidance provisions which mean a series of transactions which have the sole motive of reducing tax will fail.

Successful avoidance schemes are devised by people who've spent years working in taxation, and have likely been checked over by counsel for their legality. Often they are also disclosed to the HMRC as well.

So the chances of your simple two-transaction scheme working are practically nil, and will just end up with you having a larger bill.

Derboy

I have to laugh at all these SDLT threads that keep popping up. In comparison to other areas of taxation the rules are very simple so there's no room for practical loop holes.

As for gifting a share of property to an unborn child, that's a cracker. I really have heard it all now!

Brock_and_Roll

kinger101 wrote: »

For anyone trying to come up with clever schemes to avoid tax, there are general anti-avoidance provisions which mean a series of transactions which have the sole motive of reducing tax will fail.

Successful avoidance schemes are devised by people who've spent years working in taxation, and have likely been checked over by counsel for their legality. Often they are also disclosed to the HMRC as well.

So the chances of your simple two-transaction scheme working are practically nil, and will just end up with you having a larger bill.

You have hit the nail on the head, the general anti-avoidance provisions have spelt the end of the days when clever people would pick through the tax rules to come up with clever ruses....because now, if the sole purpose of the ruse is to avoid tax, then the scheme will fail.


Controversial somewhat as England has always historically had an "everything is legal until it is illegal" approach but that is where we are.