Stamp Duty Question..

therealbane

Hi all, whilst talking about stamp duty, we came up with this scenario..

Person X has a property which they let out.

Person Y purchases a new property as a first time buyer, with the mortgage in their name alone. They pay the usual stamp duty at the point of purchase.

Person X moves in to the property and doesn't contribute to any payments.
X&Y get married. The BTL property & the main residence property become jointly owned.

Is it possible that person X would get penalised in any way with regards to stamp duty - at the point of adding them to the title deeds?

In 5 years, say they sell the main residence and buy a new main residence, will they pay the minimum stamp duty? Even with the BTL in both names? Or would they pay any additional stamp duty?

Thanks

AnotherJoe

Easy one first, In 5 years, no extra fee because they are swapping one main residence for another.

Unsure what happens when a couple marry and one is also made owner of another's properties.

00ec25

it depends if there is an outstanding mortgage on the property at the point the spouse transfers (gifts) a share to the other. The o/s mortgage represents chargeable consideration for SDLT purposes. Obviously the additional property rules also apply where applicable.

save me writing it all out go read these:
https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-for-purchases-of-additional-residential-properties

Thrugelmir

therealbane wrote: »

Is it possible that person X would get penalised in any way with regards to stamp duty - at the point of adding them to the title deeds?

In 5 years, say they sell the main residence and buy a new main residence, will they pay the minimum stamp duty? Even with the BTL in both names? Or would they pay any additional stamp duty?

Thanks

The properties are both mortgaged. Therefore not just a question of adding names to the title deed. Depending on the mortgage transferred to the other partner. SDLT could be payable on the transaction(s) under normal rules i.e. over £125k. Possible therefore that 2nd SDLT could be payable on any amount exceeding £40k. As to both parties it is going to be a 2nd property.

therealbane

The BTL has no mortgage, but the main residence will.

Does that change anything?

Thrugelmir

Avoids the liability for one of the partners. Still leaves a potential liability for the other.

Though may be cheaper to suffer the SDLT on the original residential property than wait for the purchase of the new. Reducing the mortgage debt owed on the original property would reduce the SDLT liability.

Much depends on the actual circumstances.

JosieV

Hi I also have a question concerning stamp duty, we have paid mortage off our property that we are currently living in and will be renting this property out, and buying a new property which we will be living in, will have to raise capital so getting a rent to buy mortage, we will also be getting a small mortage on a new property based on our salaries, which we will be living in. We also have another property with a buy to let mortage. I have looked at the government website and to me it reads as we will only be living in one property we don't pay the higher stamp duty. I have tried to find an email address so I can ask them, but can not see any contact information. The solicitors say we have to pay higher stamp duty as we have not sold our house. Any advise would, be greatly appreciated

Pixie5740

JosieV wrote: »

Hi I also have a question concerning stamp duty, we have paid mortage off our property that we are currently living in and will be renting this property out, and buying a new property which we will be living in, will have to raise capital so getting a rent to buy mortage, we will also be getting a small mortage on a new property based on our salaries, which we will be living in. We also have another property with a buy to let mortage. I have looked at the government website and to me it reads as we will only be living in one property we don't pay the higher stamp duty. I have tried to find an email address so I can ask them, but can not see any contact information. The solicitors say we have to pay higher stamp duty as we have not sold our house. Any advise would, be greatly appreciated

I have no idea what you've been reading as I don't know how you could conclude that the higher rate of SDLT for the purchase of additional residential properties would not apply to you when you are purchasing an additional residential property.

Perhaps you should try reading the Guidance Note

saajan_12

JosieV wrote: »

Hi I also have a question concerning stamp duty, - then you should start your own thread rather than confusing this onewe have paid mortage off our property that we are currently living in and will be renting this property out, and buying a new property which we will be living in, will have to raise capital so getting a rent to buy mortage, we will also be getting a small mortage on a new property based on our salaries, which we will be living in. We also have another property with a buy to let mortage. - the mortgages are irrelevant as the amount paid to the seller is a cash amount. I have looked at the government website and to me it reads as we will only be living in one property we don't pay the higher stamp duty. ofcourse, most people only live in one property,
why do you think this is relevant? I have tried to find an email address so I can ask them, but can not see any contact information. - no need, the guidance and detailed examples cover your situation The solicitors say we have to pay higher stamp duty as we have not sold our house. - this is the crux. They are correct. Any advise would, be greatly appreciated

A. Start your own thread if you have a new question in future
B. Search the forum or read the gvt explanation - your exact situation has been covered many times
C. You currently own 2 properties. At the end of the transaction you will own 3 properties. Higher rate stamp duty is due.

therealbane

Actual circumstances would be:

X owns a BTL with no mortgage.

Y purchases a 400k property with a 200k mortgage.

2 years later, X & Y marry.

X transfers 50% of BTL to Y.

Y transfers 50% of main residence to X.

Would X then be liable to pay SDLT on 50% of the remaining mortgage? At the higher rate? Does it make a difference that 50% of the remaining mortgage would fall under the 125k threshold?

Would/should this method work out cheaper in the long run than X & Y purchasing the 400K property together to begin with? - This would equate to a rough 22K SDLT fee I believe?

Thank you

Pixie5740

X won't pay any SDLT when X transfer 50% of the BTL property to Y. Y will pay SDLT though because Y is the one purchasing a 50% share. The higher rate of SDLT will apply because Y is purchasing an additional property. The threshold for the higher rate SDLT is £40k (see link to guidance note given above). X may trigger a CGT liability by disposing of part of the BTL.