Stamp duty question

Bb24

I currently own a property with an ex partner. I haven't lived in the property for eight years and don't have access. I have managed to secure an order for sale which stipulates that he must maintain the whole mortgage and any fees associated.

My husband and I are looking to buy a property together. He will sell the home we have been living in for the last seven years. If we sell his house will I subject to the basic or higher level stamp duty.

I've been looking at all the literature and it talks about selling or not seeking your main residence but nothing covers my situation.

AnotherJoe

I beleave there are some exceptions about divorced / separated couples not needing to pay. You'll need to search those out in case your solicitor isn't familiar. You'll have to go to the source of the law and not internet summaries. If you do end up paying, let's say the exception doesn't apply in your case, you can get the money back as long as the old house is sold within 3 years.

kinger101

You don't have to pay the higher rate when your are selling your main residence to purchase another main residence (assuming you're aiming to complete both transactions on the same day). If the sale of your husbands property is delayed, you can reclaim the extra SDLT provided it is sold within three years.

AnotherJoe

Kinger101, the OP is NOT selling their main residence. It's owned solely by the husband. You're the second person to misread the OPs post this morning. (The other removed their post)

kinger101

AnotherJoe wrote: »

Kinger101, the OP is NOT selling their main residence. It's owned solely by the husband. You're the second person to misread the OPs post this morning. (The other removed their post)

I've not misread the post. You've misinterpreted the legislation. Married couples and civil partners can have only one main residence, but the disposal being made can be owned either jointly or solely. OP is therefore replacing their main residence.


(6) For the purposes of sub-paragraph (5) the purchased dwelling is a replacement for the purchaser’s only or main residence if—

(a) on the effective date of the transaction (“the transaction
concerned”) the purchaser intends the purchased dwelling to
be the purchaser’s only or main residence,

(b) in another land transaction (“the previous transaction”)
whose effective date was during the period of three years
ending with the effective date of the transaction concerned,
the purchaser or the purchaser’s spouse or civil partner at the
time disposed of a major interest in another dwelling (“the
sold dwelling”),

(c) at any time during that period of three years the sold
dwelling was the purchaser’s only or main residence, and

(d) at no time during the period beginning with the effective date
of the previous transaction and ending with the effective date
of the transaction concerned has the purchaser or the
purchaser’s spouse or civil partner acquired a major interest
in any other dwelling with the intention of it being the
purchaser’s only or main residence.



See page 166 of finance bill:

http://www.publications.parliament.uk/pa/bills/cbill/2016-2017/0001/17001.pdf

booksurr

kinger101 wrote: »

I've not misread the post.

I was the other misreader from earlier

OP owns property A which she has not occupied for over 8 years. It was her previous marital home with her now (divorced) ex husband. OP has a court order re her financial liability on that property, but it is unclear if a sale of it is to be forced "soon".

Therefore she remains an owner of Property A but it is no longer her main home. She is now remarried and living in the new marital home, property B, but only her new husband owns that one. So they each own one property but , due to remarriage, only one is classed as the main residence, so the other (Property A) is not a main residence ...

OP is therefore going from 1 to 2 properties and will thus trigger the higher rate SDLT since she is not replacing her (actual) main home given she is not an owner thereof. As a couple if one of them fails condition D then they both fail it, and both have to pay the higher rate.

To that extent therefore I think you are correct in saying she would be able to claim a refund provided she completes on the forced sale of the ex husband's property within 3 years since it was, without doubt, once her main home. The issue therefore is forcing the sale.

A simpler solution is for (current) husband to gift her a share of ownership of the current marital home, then she would be going from 2 to 2 and higher rate would not apply

kinger101

We seem to disagree on the interpretation of the rules for spousal properties rather than the series of events. Unhelpfully, this scenario isn't in the guidance notes. Example 16 is perhaps the closest, but the new property in that was not a main residence.

It's my interpretation that their marriage means they're both treated as owning two properties at the start and end of the transaction, and a main residence is being replaced. This would fit in with intention of HMRC to treat married couples as a single unit.

AnotherJoe

I've not misread the post. You've misinterpreted the legislation. Married couples and civil partners can have only one main residence, but the disposal being made can be owned either jointly or solely. OP is therefore replacing their main residence.
=====

I think that would need a court case to settle that in her favour since none of the government examples back this up. And the flowchart specifically asks how many properties at start and end and thats clear. Even though as you point out the legislation also states that married couples should be treated as one unit!

I take your point how the legislation could be interpreted about treating married couples as a single unit but that clashes with the fact that she starts off owning one house and ends up owning two. So there's an ambiguity here.

The "get out of jail free card" is when the property she owns with ex is sold or perhaps booksurrs idea. If the husband gifted her a nominal share to avoid SDLT issues on that transfer) then she does own her residence and no tax is due. Maybe thats the easiest solution avoids being held overa barrel by ex taking more than 3 years to sell.

cashbackproblems

i think you would still have to pay as you part own another property.

booksurr

cashbackproblems wrote: »

i think you would still have to pay as you part own another property.

that is far too simple

as Kinger says the question is whether OP's ex marital home is now classed as being "jointly" owned by her new husband and she is classed as an owner of her new home with her new husband. Therefore the new marriage is going from 2 to 2, of which the one being sold is the main home, and therefore the higher rates do not apply (subject to same day sale and purchase of course)

as kinger points out the guidance does say "A17 .... As a married couple all property owned by either of you is treated as owned jointly."

however the guide does not categorically address OP's issue since it references divorce only in the context of each person going their own way. Not the context of a remarried person still unravelling previous financial links 8 years later

"Q18 I have recently separated from my spouse and am about to purchase a new property that will become my main residence. I still own a share in the former marital home. Will I be liable for the higher rates of SDLT?

A18. If you purchase a new main residence while still owning a share in your former home the higher rates will apply. However, if you are separated and this is likely to be permanent, and your previous main residence is sold within 3 years of purchasing your new one, a refund on the higher rates can be claimed."

kinger101

It seems the final guidance notes were a bit clearer compared to the examples in the consultation document, in particular, 3.17:

3.17 There are two parts to a replacement of a purchaser’s main residence:

 there must be a disposal of the purchaser’s or their spouse or civil partner’s previous main residence, and

 the dwelling acquired must be intended to be occupied as the individual’s only or main residence



https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf