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Buying share of partners house Stamp Duty Query
Stemondo
Posts: 7 Forumite
My partner and I (Engaged not married) each have our own property and looking to eventually buy a new home together. I will be renting mine out and moving in with her for around 6 months while we save. But as my property won't be sold at the time of buying our new place I have found out we will be charged the higher rate stamp duty which works out around £20,000 which makes the investment completely pointless and would take years to get that money back if ever.
My question is, is there anyway I can buy into my partners house when moving in, owning half so when we sell it at the later date we are exempt from the stamp duty surcharge as we both have sold our main residence. I have no idea if this is possible or how it works buying a share of a house but she does have a mortgage in her name so guessing that could cause problems?
Would this be possible as even if it’s difficult and expensive to arrange, if it saves me £20k I’ll do whatever. Even if I have to pay the stamp duty surcharge on the half of her property it would be a lot cheaper.
Thanks
Steve
My question is, is there anyway I can buy into my partners house when moving in, owning half so when we sell it at the later date we are exempt from the stamp duty surcharge as we both have sold our main residence. I have no idea if this is possible or how it works buying a share of a house but she does have a mortgage in her name so guessing that could cause problems?
Would this be possible as even if it’s difficult and expensive to arrange, if it saves me £20k I’ll do whatever. Even if I have to pay the stamp duty surcharge on the half of her property it would be a lot cheaper.
Thanks
Steve
0
Comments
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Does she want you to half own her house and still own your own home?
Why dont you sell yours whilst moving in with her then buy one together whilst selling hers?0 -
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property
you currently own a property,
you will not be selling it (yet)
you wish to buy a part share of another property
you will therefore be buying an additional property and trigger the higher rate SDLT on the purchase of the share if that share is worth > £40,000.
if you pay her nothing for the share she gives you, the fact remains she has a mortgage and you would have to be added to it in which case you are taking over 50% of the outstanding mortgage liability and (subject to 40k ) that would also trigger SDLT on the value of the o/s mortgage as lenders do not allow owners who are not party to mortgages on the property
your solution is simple: do nothing until AFTER you are married.
by default a married couple are deemed to be one "unit" and have one home, the one they live in. So when she sells "her" place and buys the new one that counts as a replacement of a main home for both of you and no higher rate is due. Does not matter that you have not sold your old place in that case
read the guide in detail, all you need to know is in it:
https://www.gov.uk/government/publications/stamp-duty-land-tax-higher-rates-for-purchases-of-additional-residential-properties0 -
will you be selling any of the properties when you buy a place together?
If you put your house on the rental market and then move in with her. Your house will no longer be your main residence and so long as you sell her property to buy a new main residence, you will both be replacing your main residence and therefore no surcharge will apply.
If you sell your rental property however and buy another property to live in but keep her property, you won't be replacing your main residence and surcharge will apply.
If you sell both your properties to buy a place together at the end of the transaction day you will only own one property so no surcharge regardless of whether you live in it or not.
If you sell one property and buy a new main residence, but retain the other, surcharge will apply but will be refundable if the other property was sold within the qualifying period as you would both have eventually sold your main residences to buy a single main residence.0 -
HampshireH wrote: »Does she want you to half own her house and still own your own home?
Why dont you sell yours whilst moving in with her then buy one together whilst selling hers?
She is happy to go along with whatever will save us the most. I know we will be exempt if we both sell, but I am asking if theres a way without me selling.0 -
that is not how it works, read answers 2, 10 & 20If you put your house on the rental market and then move in with her. Your house will no longer be your main residence and so long as you sell her property to buy a new main residence, you will both be replacing your main residence and therefore no surcharge will apply.0 -
will you be selling any of the properties when you buy a place together?
If you put your house on the rental market and then move in with her. Your house will no longer be your main residence and so long as you sell her property to buy a new main residence, you will both be replacing your main residence and therefore no surcharge will apply.
If you sell your rental property however and buy another property to live in but keep her property, you won't be replacing your main residence and surcharge will apply.
If you sell both your properties to buy a place together at the end of the transaction day you will only own one property so no surcharge regardless of whether you live in it or not.
If you sell one property and buy a new main residence, but retain the other, surcharge will apply but will be refundable if the other property was sold within the qualifying period as you would both have eventually sold your main residences to buy a single main residence.
I'm not sure about this, surely if it was this easy everyone would be doing that?
you currently own a property,
you will not be selling it (yet)
you wish to buy a part share of another property
you will therefore be buying an additional property and trigger the higher rate SDLT on the purchase of the share if that share is worth > £40,000.
if you pay her nothing for the share she gives you, the fact remains she has a mortgage and you would have to be added to it in which case you are taking over 50% of the outstanding mortgage liability and (subject to 40k ) that would also trigger SDLT on the value of the o/s mortgage as lenders do not allow owners who are not party to mortgages on the property
your solution is simple: do nothing until AFTER you are married.
by default a married couple are deemed to be one "unit" and have one home, the one they live in. So when she sells "her" place and buys the new one that counts as a replacement of a main home for both of you and no higher rate is due. Does not matter that you have not sold your old place in that case
read the guide in detail, all you need to know is in it:
Her house is valued at £110K so a 50% share would be £55k, but she doesn't actually want any money for it as she will have all the money when its sold. The mortgage is just less than £80K so 50% of that would be under the £40k. So would that not work? I may have to pay solicitor and to break the fixed rate mortgage but would that be it?
We still wouldn't be married by the time we buy this new home, probably within a year after.0 -
the value of her property is irrelevant. She has an 80k o/s mortgage so, as you rightly note, if the lender accepts you on to the mortgage and she makes you co-owner (and by default on to the deeds), you acquire a 50% share worth less than the higher rate SDLT threshold and thus no SDLT is payable on that "gift"/acquisition even though you already own a propertyHer house is valued at £110K so a 50% share would be £55k, but she doesn't actually want any money for it as she will have all the money when its sold. The mortgage is just less than £80K so 50% of that would be under the £40k. So would that not work? I may have to pay solicitor and to break the fixed rate mortgage but would that be it?
We still wouldn't be married by the time we buy this new home, probably within a year after.
as you will then be purchasing the new (main) residence as (unmarried) co-owners you would have a valid claim to BOTH of you replacing your (de facto) main residence with the new property and thus not being liable to the higher rate SDLT, whilst at the same time you retain your old property that by then is let out.
the "system" is designed to catch those with high mortgages, it would appear that "you" escape that...0 -
I would query whether OP will be living in the property going into "joint ownership" as his main residence. The plan seems to be to live there for about six months until it is sold. That might not have the sufficient degree of permanence and expectation of continuity for it to count as a residence.
Is the property going into beneficial joint ownership anyway? OP says on the sale his partner will get all of the money. It sounds to me that the property is to be held on bare trust for the partner so the extra 3% stamp duty land tax will be due.0 -
the value of her property is irrelevant. She has an 80k o/s mortgage so, as you rightly note, if the lender accepts you on to the mortgage and she makes you co-owner (and by default on to the deeds), you acquire a 50% share worth less than the higher rate SDLT threshold and thus no SDLT is payable on that "gift"/acquisition even though you already own a property
as you will then be purchasing the new (main) residence as (unmarried) co-owners you would have a valid claim to BOTH of you replacing your (de facto) main residence with the new property and thus not being liable to the higher rate SDLT, whilst at the same time you retain your old property that by then is let out.
the "system" is designed to catch those with high mortgages, it would appear that "you" escape that...
Well this sounds ideal, I’ll have to speak to her lender and see what the process is and any charges.I would query whether OP will be living in the property going into "joint ownership" as his main residence. The plan seems to be to live there for about six months until it is sold. That might not have the sufficient degree of permanence and expectation of continuity for it to count as a residence.
Is the property going into beneficial joint ownership anyway? OP says on the sale his partner will get all of the money. It sounds to me that the property is to be held on bare trust for the partner so the extra 3% stamp duty land tax will be due.
Well I will be renting my property out and able to prove tenancy with an AST contract along with consent to let from my lender. 6 months is probably the minimum we would be in the property so likely to be longer, I would be on the council tax, bills etc to show proof. The 2 properties are in different areas and my new job is near the joint property so I’m hapoy I would have enough evidence that I would be living there.
I would be timing the ownership with moving in and regards to no money exchanged, money could be exchanged but seems rather pointless as we would be combining most of our accounts and assets anyway as we are at that point in our relationship. I can’t imagine a solicitor ever demanding to see proof I have paid towards it.
Would you agree it would work if I proved all the above?0
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