Second property stamp duty - decleration?

b33etlejuice

Hello,

My query is with regard to second property stamp duty.

My wife and I are looking to purchase our first property together. She currently has a 50% shared ownership mortgage on a property that when purchased was worth £115,500, we have been told that we could expect to sell the property for between £75,000 and £85,000. My question is, being as the threshold for second property stamp duty is £40,000 how will this affect us? can we declare her share of the property as being worth less than £40,000? Do we need to provide a RICS valuation to this effect? How is this investigated? There is currently a tenant in the property and we would prefer to keep it because of the current negative equity.

The worst case scenario being that we go ahead with a purchase to be told that we need to find an extra £7,500 extra for stamp duty as HMRC disagree with the valuation of the shared ownership property.

Thanks for any help.

marksoton

A tenant in the property?

Highly unlikely this complies with the lease. Is she complying with her landlord duties? Declaring income to HMRC?

Stamp duty is the least of your concerns....

booksurr

b33etlejuice wrote: »

Hello,

My query is with regard to second property stamp duty.

My wife and I are looking to purchase our first property together. She currently has a 50% shared ownership mortgage on a property that when purchased was worth £115,500, we have been told that we could expect to sell the property for between £75,000 and £85,000. My question is, being as the threshold for second property stamp duty is £40,000 how will this affect us? can we declare her share of the property as being worth less than £40,000? Do we need to provide a RICS valuation to this effect? How is this investigated? There is currently a tenant in the property and we would prefer to keep it because of the current negative equity.

The worst case scenario being that we go ahead with a purchase to be told that we need to find an extra £7,500 extra for stamp duty as HMRC disagree with the valuation of the shared ownership property.

Thanks for any help.

so your questions are:
1. can we lie on the declaration when our solicitor asks do you own another home with a share worth more than 40k?
and
2 will you be caught out by HMRC if you do undertake tax evasion?


answers:
1. Yes - you can say anything you want

2. Possibility/probably. HMRC already knows she owns another property. It will take their computer a nanosecond to spot she now owns 2 and that the value of the old one is at least borderline. Whether a human takes any action over that data is a risk you seem to want to take....

b33etlejuice

Hi Marksoton,

The property has a buy-to-let mortgage and the other 50% owner is happy with the property being sublet. I'm not sure why this is a concern?

b33etlejuice

Hi Booksur,

The last valuation of the property (by an estate agent) was 75k - 85k. Anything up to 80k will put us below the second property stamp duty threshold as I understand it. My question is more about the proccess.

How do we submit the valuation of the property to HMRC? do we need to get a further chartered survey? Or am I able to tell them that it has been valued at 80k based on the above bracket?

booksurr

b33etlejuice wrote: »

How do we submit the valuation of the property to HMRC?

you don't

like the rest of UK tax, SDLT is a self assessment exercise. You sign a declaration on the form that the info you give is correct. If HMRC check and find you gave false info then they will start the penalty process. The onus is therefore on you to be truthful. For peace of mind therefore it would be wise to have your own evidence of value to support your own declaration, but HMRC won't want it unless they decide to investigate you at which point your own valuation will be of limited use as they have their own valuation department (Valuation Office Agency) and it is the VOA's figures which are final, not yours, unless you choose to dispute their figures in a tribunal (ie court!).

I assume your solicitor will submit the SDLT 1 form on your behalf. Your solicitor will therefore ask you to make a self declaration as to whether the new property is an additional property or not. (Question 1 on the form)

If you say no it isn't, then it is up to the solicitor to decide for themselves how much they trust you or whether they want evidence to support your assertion the wife's share of the let property is £39,999 or less (the threshold is 40,000, not 40,001)

davidmcn

booksurr wrote: »

it is up to the solicitor to decide for themselves how much they trust you or whether they want evidence to support your assertion the wife's share of the let property is £39,999 or less

In general solicitors require to trust their clients about the SDLT return, it is purely a matter between the taxpayer and HMRC. All the solicitors will care about is not knowingly aiding tax evasion.

b33etlejuice

This is really useful, thank you. I think my course of action is to purchase a chartered survey. I'll then consider this to be the valuation, rather than that of the estate agent. If this gives me the opportunity to declare the property at £39,999 then I shall, if it's investigated, I'll hopefully have enough evidence to suggest the valuation is proper and won't need to find an extra 5-10k.

AdrianC

Is that £80k valuation for 100% of the property?

b33etlejuice

Hi Adrian C, the valuation that I received for 100% of the property was 75k - 85k.

Regards.

AdrianC

b33etlejuice wrote: »

Hi Adrian C, the valuation that I received for 100% of the property was 75k - 85k.

So, yes, the 50% share is valued at 50% of that - £37.5k-£42.5k