Stamp Duty Debacle

mikefoster

Just looking for some advice really. We are buying a new property worth about 260,000 and paying off the mortgage on our current property. We will own the current propertyjointly with my sister and husband. We intend to put their names on the deeds once the mortgage is paid.The idea is to rent it. However, to buy my new property, I'm informed that the stamp duty will be about 10600 because We will own 2 properties. However, the stamp duty for my sister to invest in our current property will only be 2500. Her original property is worth more than the one we are buying. Does anyone have any advice on this? Or is it a case of pay the ten grand. Would it work out cheaper in the long run to sign it over to my sister then her to resign half back over to me. That way it would cost less? I'm just astonished at the stamp duty!

Help!

davidmcn

Might just be because it's late at night, but your post is confusing, in particular:

mikefoster wrote: »

Would it work out cheaper in the long run to sign it over to my sister then her to resign half back over to me.

Which property is "it"? You've mentioned three so far! If you mean the one you're buying, you can't "sign it over" to her until you buy it, and since both you and your sister already own other properties then whoever buys it will be paying the additional rate of SDLT anyway.

getmore4less

mikefoster wrote: »

Just looking for some advice really. We are buying a new property worth about 260,000 and paying off the mortgage on our current property. We will own the current propertyjointly with my sister and husband. We intend to put their names on the deeds once the mortgage is paid.The idea is to rent it. However, to buy my new property, I'm informed that the stamp duty will be about 10600 because We will own 2 properties. However, the stamp duty for my sister to invest in our current property will only be 2500. Her original property is worth more than the one we are buying. Does anyone have any advice on this? Or is it a case of pay the ten grand. Would it work out cheaper in the long run to sign it over to my sister then her to resign half back over to me. That way it would cost less? I'm just astonished at the stamp duty!

Help!

The extra SDLT has been in the news for nearly a year so surprised you were not aware of the extra 3%

Going into business it is a good idea to do research the business and all the numbers to make sure it is going to be financially viable accounting for all the costs.

as above if you both already own property then there is no way round the extra SDLT.

If one of you is selling you may need to clarify your post

amnblog

Its not just you David. Mike's post leads us to some conclusions as to what 'might' be happening but is not clear.

Your solicitor is best placed to answer SDLT queries Mike.

mikefoster

Sorry about confusion. I own a property worth 130000 with a mortgage remaining which myself and my sister are paying off so we can rent the property.

The property we are buying is 258000 and 10600 in stamp.
My sister owns a property of equivalent price to around 258000 but will only pay 2500 in stamp on taking half the ownership of my current property.

I was confused at the stamp duty because the new property replaces my main residence but as I already will own my old property, I am liable to the extra stamp duty.

I was just wondering whether I could sign my current property over to my sister and then her sign half back over to me in the future. Therefore paying a lower stamp duty overall.

mikefoster

To summarise, I will own a property, my sister will own a property and we will own a property jointly to rent out.

anselld

mikefoster wrote: »

I was confused at the stamp duty because the new property replaces my main residence

It only replaces your main residence if you sell your previous main residence. Otherwise it is additional.

Any ploy to temporarily transfer ownership to avoid SDLT will (hopefully) be seen through by HMRC.

Pixie5740

Have you read the additional SDLT guidance note?

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

From what you are describing it sounds like this jointly owned property with your sister will be a second property for both of you which will be rented out, is that correct? If so the additional 3% SDLT will be due

mikefoster

anselld wrote: »

It only replaces your main residence if you sell your previous main residence. Otherwise it is additional.

Any ploy to temporarily transfer ownership to avoid SDLT will (hopefully) be seen through by HMRC.

Who said it was a ploy?

SavingSteve

What else is it? You're asking for ways to game the system to pay less sdlt, at least own that fact.

amnblog

Mike, have you read the bit about selling the old property within 3 years and getting the 3% back?