LBTT Cost of Buying Ex Out

nadinemuir

Hi there, I have separated from my partner (unmarried) and decided to buy him out of our jointly owned flat. I was advised by the halifax panel solicitor that there would be no LBTT, but when the remortgage went through on Tuesday I see they have billed me £573 for LBTT. The flat was bought last year for £336633 and revalued recently by the Halifax for the remortgage at £350K. Taking into account the mortgage outstanding, this left us with £108K equity, so I added bought out my ex with £54K and added this to the mortgage. I have issue with the solicitor telling me it wasn't payable and then billing it to me with no prior warning, but I'd be very grateful if can anyone confirm if the payment is even correct as I've googled for yonks and can't see anything speifically about this.

Many thanks, Nadine

G_M

Scotland perchance?

davidmcn

G_M wrote: »

Scotland perchance?

Yes, hence the reference to LBTT rather than SDLT.

From memory I think there is a relief for payments made as part of a divorce settlement, but I suspect there isn't something similar for unmarried couples splitting things up.

nadinemuir

Yes, this is Scotland. I can see something specific for divorce and civil partnerships but when it comes to cohabitation, there are rules saying that unmarried couples are considered one and so are adversely impacted by the second properties rules but nothing on the reverse regarding relief for separation. I'm thinking it might be worst of both worlds.

davidmcn

nadinemuir wrote: »

there are rules saying that unmarried couples are considered one and so are adversely impacted by the second properties rules

Other way round - married couples are considered as one, unmarried couples can each buy a property without incurring the additional rate of LBTT/SDLT.

nadinemuir

I read it differently in this guidance David (I'm not allowed to post hyperlinks but it's the follow site I was reading revenue.scot/land-buildings-transaction-tax/guidance/lbtt-legislation-guidance/lbtt10001-lbtt-additional-dwell-18

But don't suppose it matters for my question though. Do you know how my calculation would be worked out at all?

Pixie5740

I think it might be the LBTT for buying the other half of the property and the change of ownership but I'm not sure. It's just that £583 is about the right amount of LBTT for half the value of the property. What explanation has your solicitor given for the LBTT charge?

Pixie5740

davidmcn wrote: »

Other way round - married couples are considered as one, unmarried couples can each buy a property without incurring the additional rate of LBTT/SDLT.

Cohabiting couples in Scotland are hit with the additional LBTT the same as married couples can be. Recently my colleague's bidey-in was trying to buy a new family home in his name only whilst my colleague was trying to sell the home they were currently living in which was in her name only. He got hit with the additional LBTT even though they weren't married. Thankfully her place sold a few months after he bought the new home and he could claim it back.

nadinemuir

Yes that sounds about right Pixie as there is an example on the official website
Example:

Mr Cash and Ms Carter are cohabitants. They each own separate dwellings (which they purchased individually before they began cohabiting and used as their respective main residences). Mr Cash then sells his previous main residence and purchases a new dwelling to rent out.
At the end of the day that is the effective date of the transaction, Mr Cash "owns" more than one dwelling (he is the owner of the newly purchased dwelling and, for the purposes of the LBTT(A)(S)A 2016, is deemed to be the owner of his cohabitant's existing dwelling ("deemed ownership")) and is not replacing his main residence so the ADS will apply.


Just no example for my situation, grrr!

nadinemuir

The solicitors have been shockingly bad, would not reply to my emails or calls, messed up the funds transfer and also sprang other costs that I wasn't expecting, which I only found out about after the remortgage had completed. If anyone has the option of not using Aberdein Considine I recommend that they do that!!

I've tried lots of calculations, but I can't get that exact value. The closest I can get is if I take half the new valuation and charge that at 0% for the first £145K and 2% for the next £30K which comes to £600.

davidmcn

Pixie5740 wrote: »

Cohabiting couples in Scotland are hit with the additional LBTT the same as married couples can be.

Right enough, wasn't aware of that. I suppose there is a difference in that married couples are caught even if they've ceased to "live together as married"!

OP, you should have seen the LBTT return which would show how it was calculated?