Yet another stamp duty question!

CrispFan

Hi all,

I know there's a lot of stamp duty questions asked, but we find ourselves in an unusual situation and I can't find a scenario that fits us on the hmrc document with all of the examples. I'm hoping you may have an idea of what could/will happen with our soon to be property sale/purchase. I'll try to be brief

*Unmarried couple
*I own a house outright in my sole name, bought 9 years ago, my parents live in this house. I have never lived here, it's never been my main residence, or any residence at all
*Partner owns the house we live in, bought 6.5 years ago. This is the main residence for us both as per hmrc guidelines (electoral roll, children's school, banks, insurance, utility bills etc). I also pay half the mortgage/bills/maintenance (can prove with bank statements etc). Mortgage is in partner's name
*Selling the house we currently live in (main residence), to jointly buy a new main residence with a joint mortgage and both our names on deed
*Conveyancer says she thinks we're liable for higher rate stamp duty as I own 2 properties at the end of the transaction (fair enough, as per the flow charts), but she's not 100% certain (not filling me with confidence!)

My questions are ...
*Should we be treated as 'one unit' therefore selling and buying new main residence? Or is this only the case if we're married?
*If we're married, would we be liable for higher rate?
*If we pay the higher rate and get married within the 36 months, would I then be classed as disposing my main residence and able to claim a refund?
*Do we just have to suck it up and pay? (We prepared for paying so not an issue, just curious as the conveyancer wasn't confident in her answer?

Thanks for your time!

Pixie5740

Your situation is not unique in the slightest and the same scenario has been posted many times on the forum already.

Your solicitor is correct, you will pay the additional SDLT. You currently own 1 property. At the end of the transaction you will own 2 properties i.e. you will have purchased and additional property.

CrispFan

So it can only be your main residence if you own it? Or if you're married? Apologies for not finding the answers on other threads, I would like to understand more fully what would make the house I live in my main residence? Would being married make us 'one unit' and therefore make this house my main residence?

Pixie5740

Try reading HMRC's guidance then (which has been linked to on all the other threads about the higher rate of SDLT).

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/570876/SDLT_Higher_rates_for_additional_properties.pdf

CrispFan

I have, but can't answer all my questions. For example,

3.1 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 are met

● Condition A - the chargeable consideration is £40,000 or more;
● Condition B - the dwelling is not subject to a lease which has more than 21 years
to run on the date of purchase;
● Condition C - the purchaser owns a major 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.
3.2 If any of Conditions A to D are not met the higher rates will not apply to the
purchase

I meet A, B and C but have limited understanding of D as this house that is being sold is my main residence. Further on, section 3.17 states

There are two parts to a replacement of a purchaser’s main residence:
● there must be a disposal of a major interest in the purchaser’s or their spouse or
civil partner’s previous main residence, and
● the dwelling acquired must be intended to be occupied as the individual’s only
or main residence

Obviously, where it refers to spouse, I presume if we were married, we wouldn't have to pay higher rates as my spouse would be disposing of a major interest in his main residence?

So the question that I still do not know the answer to is this. If we are married, would this mean neither of us then meet condition D and therefore do not have to pay higher rate?

G_M

Relevant factors highlighted below

CrispFan wrote: »

*Unmarried couple this is very pertinant
*I own a house outright in my sole name, bought 9 years ago, my parents live in this house. I have never lived here, it's never been my main residence, or any residence at all
[STRIKE]*Partner owns the house we live in, bought 6.5 years ago. This is the main residence for us both as per hmrc guidelines (electoral roll, children's school, banks, insurance, utility bills etc). I also pay half the mortgage/bills/maintenance (can prove with bank statements etc). Mortgage is in partner's name[/STRIKE]
[STRIKE]*Selling the house we currently live in (main residence), to [/STRIKE]jointly buy a new main residence with a joint mortgage and both our names on deed
*Conveyancer says she thinks we're liable for higher rate stamp duty as I own 2 properties at the end of the transaction (fair enough, as per the flow charts), but she's not 100% certain (not filling me with confidence!)

My questions are ...
*Should we be treated as 'one unit' therefore selling and buying new main residence? NoOr is this only the case if we're married?Yes
*If we're married, would we be liable for higher rate? Strange question as you're not.
*If we pay the higher rate and get married within the 36 months, would I then be classed as disposing my main residence and able to claim a refund? :rotfl::rotfl::rotfl:
*Do we just have to suck it up and pay?

I'm araid so.

I love that 3rd question.

CrispFan

Well, you gotta try 😂😂😂 the strange question was asked (about being married) as we have time before completion to get married if this would make a difference 😊 we've been together 11 and a half years, we're going to get round to it soon, just might be sooner than we thought! We just keep finding other things to spend our money on e.g. new house!

Keep_pedalling

CrispFan wrote: »

Well, you gotta try 😂😂😂 the strange question was asked (about being married) as we have time before completion to get married if this would make a difference 😊 we've been together 11 and a half years, we're going to get round to it soon, just might be sooner than we thought! We just keep finding other things to spend our money on e.g. new house!

I hope a couple of those other things was getting wills and LPAs in place.

CrispFan

We have wills in place already, although we know these would need updating if we got married, and will also need updating when we have completed on the new house. Never thought about LPA, thank you for mentioning it! Will add to this list for doing with the new wills

Pixie5740

The guidance runs through various scenarios in chapters 8 and 9. I suggest you study those particularly example 2 in chapter 9.

00ec25

CrispFan wrote: »

I have, but can't answer all my questions. For example,

3.1 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 are met

● Condition A - the chargeable consideration is £40,000 or more;
● Condition B - the dwelling is not subject to a lease which has more than 21 years
to run on the date of purchase;
● Condition C - the purchaser owns a major 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.
3.2 If any of Conditions A to D are not met the higher rates will not apply to the
purchase

I meet A, B and C but have limited understanding of D as this house that is being sold is my main residence. Further on, section 3.17 states

There are two parts to a replacement of a purchaser’s main residence:
● there must be a disposal of a major interest in the purchaser’s or their spouse or
civil partner’s previous main residence, and
● the dwelling acquired must be intended to be occupied as the individual’s only
or main residence

Obviously, where it refers to spouse, I presume if we were married, we wouldn't have to pay higher rates as my spouse would be disposing of a major interest in his main residence?

So the question that I still do not know the answer to is this. If we are married, would this mean neither of us then meet condition D and therefore do not have to pay higher rate?

you have correctly identified that Condition D is not met - you are not replacing a main home which you own

you should have quoted 3.42 not 3.43A as the former explains your position:

3.42 Where a transaction is entered into by joint purchasers the higher rates will apply if the transaction would be a higher rates transaction for any of the purchasers considered individually. So if there are two individual purchasers and Conditions A to D are all met for one of them only, the transaction will be charged at the higher rates.

- you are purchasing the new place together as a joint purchase
- you will continue to own a property after having purchased the new one, so you will have an additional property
- you do not own the property currently being sold by your girlfriend so its status as your main home is irrelevant

even if you get married, the situation will not alter because the married couple will still have a property which one of them owns and has not sold:
3.45 This means that where a purchaser is married or in a civil partnership, if Conditions A to D are met by either spouse or civil partner, the transaction will be a higher rates transaction.

you (yourself) cannot claim to be replacing a main home and therefore not acquiring an additional property until such time as you are an owner of the one you currently use as that home and therefore have indeed sold and replaced it. Whether you are married or not is irrelevant. The "rule" that restricts a married couple to having one main home is preceded by the requirement/assumption that they both own it