Stamp duty surcharge

Tom99

[FONT=Verdana, sans-serif]What's the problem with completing the sale of the flat before you buy another?

As I understand it, at the moment you own a legal and beneficial interest in the flat which is worth more than £40,000 so will pay the extra 3% if you buy another property?

[/FONT] [FONT=Verdana, sans-serif]You are transferring the equity on this flat, does that mean you are selling your 50% share to your brother or are you just giving your brother your share free? If so what's the hold up?

[/FONT] [FONT=Verdana, sans-serif]In order not to count for the extra 3% you can give up your beneficial interest but still own a legal interest and still be registered as a legal owner with the land reg.

[/FONT] [FONT=Verdana, sans-serif]The deed of trust would be the legal document which gives up your beneficial interest and the HMRC notes refer to it as follows:

[/FONT] [FONT=Verdana, sans-serif]3.13A Where an individual is one of the legal owners of another dwelling (their name is on the title at the Land Registry) but they have absolutely no beneficial interest in that other dwelling, they will not own an interest in that other dwelling that meets Condition C. This would have to be evidenced in writing. Any entitlement to capital proceeds from the sale of the property, to income or to occupy the property would be likely mean that they do have a beneficial interest."

[/FONT] [FONT=Verdana, sans-serif]The deed of trust can be prepared by your solicitor and once signed by you and you brother will be effective immediately. It does not have to be registered at the land registry hence the time saving. However it will have to say you have no right to occupy the flat, receive any income from it nor any proceeds when it is sold. Ie if your brother is paying you for your share that will have to be made at the same time.

[/FONT] [FONT=Verdana, sans-serif]So if you dispose of you beneficial interest in the flat that way before your new purchase you will not pay the extra 3%.

[/FONT] [FONT=Verdana, sans-serif]Or since the flat was previously your main residence then pay the 3% now now claim it back when you dispose of your interest in the flat.

[/FONT] [FONT=Verdana, sans-serif]You ceased using the flat as your main residence in April 2016 so he timing is as follows:

[/FONT] "[FONT=Verdana, sans-serif]For purchases on or before 26 November 2018, there is a replacement of a main residence if, at any time before the purchase, the purchaser, or their spouse or civil partner, disposed of a major interest in another dwelling and the purchaser has not purchased another main residence in the period between that disposal and the new purchase. That other dwelling must have been, at some time, the only or main residence of the purchaser.

[/FONT] [FONT=Verdana, sans-serif]3.20 For purchases on or after 27 November 2018, there is a replacement of a main residence if, in the three years ending with the purchase, the purchaser disposed of a major interest in another dwelling and that other dwelling was, at some time in the three year period, the only or main residence of the purchaser"[/FONT]

Fixil9

My brother is classed as self employed, and in order too carry out a transfer of equity he has to be financially assed by a mortgage lender ( current or new) and they seem to be dragging their heels, asking for info, waiting a few weeks then asking for more & so on ( since November 17).
I am not seeking any payment for my share in the property & will be pretty much gifting it to him so I don!!!8217;t honk you may have given me the answer I!!!8217;m looking for with the deed of trust.

Thanks for the info guys I!!!8217;ll get onto my solicitor about that now.

SDLT_Geek

I expect you have found the forms for applying the refund of the surcharge. There is a link to them here: https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties


The HMRC guidance on the higher rates of stamp duty land tax has now been moved to their Manual. The section about claiming a refund where the sale of a previous home comes before the purchase of a new home is here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09809


They have repeated in the manual https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09805 their concession which can sometimes be applied where the sale happens soon after the purchase (in practice within about 20 days):


"In the case of a disposal of a previous main residence following a purchase of a new main residence, the land transaction return will have been made based on the higher rates of tax, unless the disposal happened before the date on which the land transaction return must be submitted. In such a case the land transaction return should be completed as if the higher rates do not apply. The additional tax paid as a result of the transaction being a higher rates transaction can be reclaimed after the subsequent sale by amending the return [Para 8(3)]."