Stamp duty on second homes question

dac1

Please can you confirm the following scenario.

Mr Adam Alpha and Miss Eve Beta purchase a house together five years ago through a joint mortgage. This is their only home and its their residing property. They are unmarried.
Last year Adam and Eve paid off their mortgage and therefore own the home outright. This is still their residing property and they are still unmarried.
Is it possible for Eve to transfer her share to Adam so it's in Adams name only, and then for Eve to purchase a property in her name only. So Adam owns property 1 in his name only and Eve owns property 2 in her name only.

Would this avoid the second-home Stamp Duty increase?
How many months/years from Eve buying the second home would it have to be before Adam and Eve could be on the deeds for both properties and to rent out property 1 and have property 2 as their residing property?

You clarification will be much appreciated. Thanks.

Thrugelmir

dac1 wrote: »

Please can you confirm the following scenario.

Mr Adam Alpha and Miss Eve Beta purchase a house together five years ago through a joint mortgage. This is their only home and its their residing property. They are unmarried.
Last year Adam and Eve paid off their mortgage and therefore own the home outright. This is still their residing property and they are still unmarried.
Is it possible for Eve to transfer her share to Adam so it's in Adams name only, and then for Eve to purchase a property in her name only. So Adam owns property 1 in his name only and Eve owns property 2 in her name only.

Would this avoid the second-home Stamp Duty increase?
How many months/years from Eve buying the second home would it have to be before Adam and Eve could be on the deeds for both properties and to rent out property 1 and have property 2 as their residing property?

You clarification will be much appreciated. Thanks.

There'll be stamp duty to pay on the transfer. Even if nothing else.

Buying in your husband or wife's name

The government will treat married couples and civil partners living together as one unit.

This means any homes owned by either partner will be included when the stamp duty bill comes due on the purchase of another property.

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 within 36 months.

The government is also proposing the same system for joint purchasers so cohabitees may not be at any advantage.

AnotherJoe

They aren't married or civil partners though.and they won't be joint purchasers, indeed the opposite. So I think this plan might work.

Dunno about the stamp duty on transfer . Could it be transferred for a nominal sum ?

p00hsticks

AnotherJoe wrote: »

They aren't married or civil partners though.and they won't be joint purchasers, indeed the opposite. So I think this plan might work.

Dunno about the stamp duty on transfer . Could it be transferred for a nominal sum ?

I think youre right in that the transfer may trigger some stamp duty to be paid

https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

TrickyDicky101

Will Eve need a mortgage to purchase property 2?

If not, on a subsequent transfer, there will potentially be nil chargeable consideration for SDLT purposes and therefore no SDLT liability (additional or otherwise).

There could well be CGT implications, however.

davidmcn

Any SDLT on the transfer of Property 1 is based on the consideration (not the property value) - so the price paid, though bear in mind that if e.g. Adam is contributing towards the price for Property 2 that may be viewed as a consideration.

dac1

Thanks very much guys for your time.

I'm afraid I'm a little lost on all the technicalities (SDLT, CGT, considerations). I will get there though.

Eve will need a mortgage to purchase property 2.

When Eve transfers her 50% share of the property 1 to Adam, it could be transferred for free or Adam can make a payment to Eve (i.e. buy it from her).

If 'consideration' means the original purchase price of property 1 then that was under the £125k when bought five years ago so no Stamp Duty was paid. It is now worth around £170k.

Adam and Eve are looking for a way to keep property 1 and purchase property 2 through an approach that doesn't accrue the 2nd-home Stamp Duty tax increases brought into effect on April 1st.

Thanks.