Stamp Duty Question

StephenE

Dear all,

My wife and I are first-time buyers and have received conflicting advice about how much stamp duty we’ll need to pay on our new home. My wife inherited a 9% share of a property abroad 5 years ago.

My question: Is this considered a second property and do we therefore need to pay the higher SDLT rate?

My reasoning: No, based on the following extracts that I've found online and in the HMRC guidance notes. The sample situation that most closely matches our own is this:

A small share (50% or less) in a property which has been inherited within the 3 years of the purchase will not be taken into account in determining whether a purchaser is purchasing an additional residential property.

This doesn't quite apply to us because the share was not inherited within the last 3 years. There is no indication of how property inherited earlier is affected. Other guidance states:

some shares in residential property are exempt. They are shares worth less than £40,000; or shares in a property inherited within the last three years which represents less than 50% of the value of the property (including any share held by your spouse (if any)); or ownership of static caravans, mobile homes or houseboats; or shares in residential property outside England Wales and Northern Ireland.

AND:

Under the rules for the purchase of a single dwelling, the higher rates will apply to the purchase of a major interest in a single dwelling by an individual, if at the end of the day of purchase Conditions A to D below are met:

• Condition A - the chargeable consideration is £40,000 or more;
• Condition B - the dwelling is not subject to lease which has more than 21 years to run on the date of purchase;
• Condition C - the purchaser owns an interest in another dwelling which has a market value of £40,000 or more and is not subject to a lease which has more than 21 years to run at the date of purchase of the new dwelling; and
• Condition D - the dwelling being purchased is not replacing the purchaser’s only or main residence.

If any of Conditions A to D are not met the higher rates will not apply to the purchase.

SO: My reasoning is that as the share of my wife's property is less than 50% and the value of the share is much lower that 40k, we are not liable to pay the higher rate of tax. Can anyone advise on whether my thought process is sound here? Or is there a flaw in my thinking somewhere?

Many thanks for reading and any help you can offer!

davidmcn

Yes, condition C isn't satisfied so it doesn't count as an additional dwelling.

G_M

As david says, if the value of the inherited property is less than £450K (ish) then higher rate SDLT does not apply. ie her 9% is less than £40K.

Mega_byte84

I also have a query, we are looking to buy a property at £129950. I'm a bit confused, a mortgage advisor has told me I will need to pay 2599 in stamp duty/tax but any place I look at online says it will only be £99 can anyone shed any light for me

HB58

Mega_byte84 wrote: »

I also have a query, we are looking to buy a property at £129950. I'm a bit confused, a mortgage advisor has told me I will need to pay 2599 in stamp duty/tax but any place I look at online says it will only be £99 can anyone shed any light for me

Do you own, or part-own any other property?

Mega_byte84

HB58 wrote: »

Do you own, or part-own any other property?

I am selling the house I currently own to buy this house

G_M

Mega_byte84 wrote: »

I also have a query, we are looking to buy a property at £129950. I'm a bit confused, a mortgage advisor has told me I will need to pay 2599 in stamp duty/tax but any place I look at online says it will only be £99 can anyone shed any light for me

Since this is will be your only owned property at the end of the transaction, you'll pay 2% SDLT on £4950. That's £99.

Your mortgage adviser appears to have calculated 2% on the full purchase price. He's a numpty. Find an adviser who knows what's what!

Mega_byte84

Thank you everyone for putting my mind at ease I thought I was going insane lol

AnotherJoe

Mega_byte84 wrote: »

I also have a query, we are looking to buy a property at £129950. I'm a bit confused, a mortgage advisor has told me I will need to pay 2599 in stamp duty/tax but any place I look at online says it will only be £99 can anyone shed any light for me

Hopefully "a mortgage adviser" is now "the mortgage adviser we were going to use but are now using a different one who has a clue"