SDLT and granny annexe

moneysavermummy2014

Anyone recently experienced a house purchase with a granny annexe and the SDLT issue?

Appreciating back in April there was a u-tune on the increased SDLT for granny annexes a part of a property purchase, my solicitor has just mentioned this may actually apply to us if we opt for the property we want (I don't know why!) and I need to get some tax advice. A quick google and I'm not sure what I think applies to us and what wouldn't....

Situation of property: former B&B with a self contained annexe (has it's own access from the outside on one side, but is also accessed via the main house on the other) in which an elderly relative of the seller currently lives.

If we agreed on an offer, we would be purchasing with the idea that one day we may need the annexe for an elderly or disabled relative (ground floor annexe on one level so access is great for my disabled sister should ultimately she come and live with us). The annexe has no separate garden or driving access and uses the same facilities as the main residence.

Firstly: On the above basis, does anyone know if the additional 3% SDLT would apply? (Yes, I will also seek advice off-forum but I figured I'd ask here for informal opinions while I can).

The above is our intention, but, should we move in and after a year or so and if my sister does not yet need to live there; aside from income tax implications and planning consents (if necessary), is there a consideration at this stage in terms of SDLT should we at some point in the future consider renting it out on an AST? (if that makes sense? Appreciating possibly not....)

Thanks all.

MSM x

HappyMJ

Informal opinions are all you'll really get but it gives you an idea.

What's the main house worth and what is the granny annex worth? There's something to do with the value of the granny annex being worth no more than 30% of the main property.

Are you buying both properties in the same transaction?

I can't quite tell if this is two titles or not. It wouldn't be an annex if the occupier needs to use the facilities of the main building for washing and eating...it's just an outdoor room....but then you've also said self contained so it's confusing.

moneysavermummy2014

HappyMJ wrote: »

Informal opinions are all you'll really get but it gives you an idea.

What's the main house worth and what is the granny annex worth? There's something to do with the value of the granny annex being worth no more than 30% of the main property.

Are you buying both properties in the same transaction?

I can't quite tell if this is two titles or not. It wouldn't be an annex if the occupier needs to use the facilities of the main building for washing and eating...it's just an outdoor room....but then you've also said self contained so it's confusing.

Apologies, no, I'll describe it. It's got it's own facilities for the most-part; two bedrooms, one bathroom and a lounge, in which there is essentially a cupboard and a kitchen sink and microwave, so, a kitchenette in essence. If we had a relative move in we would put a proper kitchen area in so it would be a proper kitchen/diner for her. In terms of access to the main house, it is accessed via the kitchen so not sure if in these terms it would constitute shared access to facilities as it's own kitchen isn't very full, but is technically useable. In terms of it's own access, it has it's own front door directly on to the drive, just down from the main house front door.

I would be very surprised if it's value exceeded a third of the value of the house, possibly not even 20% of it. This is one purchase, of one property - there are not under separate deeds, it is one property title; the property is a main residence with 'ancillary accommodation' which I guess in it's B&B days were the owners' private facilities.

HappyMJ

moneysavermummy2014 wrote: »

Apologies, no, I'll describe it. It's got it's own facilities for the most-part; two bedrooms, one bathroom and a lounge, in which there is essentially a cupboard and a kitchen sink and microwave, so, a kitchenette in essence. If we had a relative move in we would put a proper kitchen area in so it would be a proper kitchen/diner for her. In terms of access to the main house, it is accessed via the kitchen so not sure if in these terms it would constitute shared access to facilities as it's own kitchen isn't very full, but is technically useable. In terms of it's own access, it has it's own front door directly on to the drive, just down from the main house front door.

I would be very surprised if it's value exceeded a third of the value of the house, possibly not even 20% of it. This is one purchase, of one property - there are not under separate deeds, it is one property title; the property is a main residence with 'ancillary accommodation' which I guess in it's B&B days were the owners' private facilities.

If it really is just the one title then you pay SDLT on the one title no matter how many bits it consists of. As long as you own no other property you won't have any additional SDLT to pay.

The SDLT concessions apply to properties consisting of two titles.

If it were two titles then you would pay additional SDLT on 50% of the value and normal SDLT based on two transactions each for 50% of the value of the whole parcel. For example two titles and purchase price of £250,000 would have no normal SDLT on the first transaction of £125,000 and 3% on the other transaction of £125,000. If it's just the one title you pay 0% on the first £125,000 and 2% on £125,000. Not a huge difference really.

xylophone

u-tune on the increased SDLT

Mr Osborne's theme tune?

Give me money, that's what I want:)

https://www.youtube.com/watch?v=3If5AWP5eL4

moneysavermummy2014

xylophone wrote: »

Mr Osborne's theme tune?

Give me money, that's what I want:)

https://www.youtube.com/watch?v=3If5AWP5eL4

:rotfl::rotfl: Yeah, have you not heard it? It's currently fighting off stiff competition from 'Money, money, money' and 'I've got a lovely bunch of coconuts'.....

moneysavermummy2014

HappyMJ wrote: »

If it really is just the one title then you pay SDLT on the one title no matter how many bits it consists of. As long as you own no other property you won't have any additional SDLT to pay.

The SDLT concessions apply to properties consisting of two titles.

If it were two titles then you would pay additional SDLT on 50% of the value and normal SDLT based on two transactions each for 50% of the value of the whole parcel. For example two titles and purchase price of £250,000 would have no normal SDLT on the first transaction of £125,000 and 3% on the other transaction of £125,000. If it's just the one title you pay 0% on the first £125,000 and 2% on £125,000. Not a huge difference really.

Thanks for the info - we do own another property but that is purely a BTL. The one we are buying is replacing our existing main residence (which we are selling) and will become our main, and only, residence (e.g. our BTL is AST and never used by us etc.). Solicitor/mortgage advisor seemed to think this was of no issue as we are replacing one main residence with another but I'd be interested to hear if anyone thinks otherwise? x

G_M

1) you are replacing your primary residence with another, so the additional SDLT does not apply.

2) Assuming the main house and annexe are both on the same Title (are they?), and given that the annexe has no kitchen and relies on the main house (throw that microwave out!), the additional SDLT does not apply.

That's my informal response.....

Hoploz

Here is a report which explains the revised tax.....

http://www.moneywise.co.uk/news/2016-04-13/government-u-turns-extra-stamp-duty-granny-flats

You shouldn't have to pay it. The government realised they could be penalising people when they want to house and care for their elderly relatives so they revised it.

"However, if the annexe is worth more than a third of the main property – for instance, the main property is worth £250,000 and the separate ‘granny flat’ is also worth £250,000, then the buyer would pay the extra 3% stamp duty on the value of the whole transaction – that is, £500,000."