New Stamp Duty Land Tax

amillionlittlepieces

Hello All!

I've already asked a few questions on the new Stamp Duty for additional properties, but have a fresh query!

Basic summary is I own a property (bought in 2007 with 3 other friends), moved out in 2011 and been renting since. Now I want to buy a house with my fianc!e i will have to pay the higher rate for additional properties...

My query when going through the conditions published by HMRC relates to the value of the previously owned property, whereby if it is LESS than £40,000 the higher rate will NOT apply.

Going into the detail of this, it states that I must have an interest in a property (which I do, 25% based on the house being owned as tenants in common) and that "That major interest must have a market value of more than £40,000"

Does this mean that if the propert is worth £120,000 then my major interest in the property would be valued at 25% of the market value at £30,000 meaning the tax would not apply?

As it also states "The valuation is the market value of the interest owned, or treated as owned by the individual in the dwelling." Again perhaps stating the interest owned by the individual, myself only, which is 25% of the full value.

The only mention of interest in a joint ownership states that if "an individual is a joint owner of another dwelling then they may meet Condition C if the interest in land is a major interest not subject to a lease longer than 21 years and the interest that they hold is worth more than £40,000." again to me suggesting that is only relates to the interest held is by the individual.

What are people's opinions on whether I've interpreted this right? Or is it wishful thinking on my behalf?...

Thanks

booksurr

thank you for reading the guidance before posting.

you are totally correct, as para 3.1 says: "if at the end of the day of purchase Conditions A to D are met" the higher rate applies. So in your example, 25% of £120k is indeed < £40k, so Condition C (share > 40K) is not met and the lower rate only applies.

simples. (assuming of course each person's share is <£40k and there is not a collective purchase where one person involved will end up owning a share worth more than 40k. Remember joint purchases apply the rules to all involved in the transaction. If one of the purchasers meets all 4 conditions, then they all are deemed to meet them jointly, even if some of them would not if they were acting individually - para 3.42!)

(there could of course be "some fun" had in deciding what is the "value" of a 25% share since, as others have posted before, the sum of the parts is not the whole when it comes to trying to sell only a part share of a property, since who would buy 25% of a property if sold on the open market - very restricted market so the value would not be 25% of the property's 100% value, it would be less. That is however a technical argument best left for a real situation where it is cost effective to employ a valuer to argue specifics)