2nd Property? - Stamp Duty

dcrep

Hi Everyone!
Background to my situation: A (long) while ago, my relative purchased a property with her (then) partner. They split up and the property is now held jointly in our names. The flat is in London.
That was 20 years ago and I'm now starting a family of my own.
Not married, but now have a beautiful baby.
Other half has a flat which we'd prefer to keep.

So, I'd now like to own a house - space for items and more kids In London that means £500K+.

Could anyone advise on the best way to proceed. Or point me in the right direction? Reducing stamp duty/bills etc...

At the moment I'm considering removing myself from the mortgage/deeds of the flat (if I can). Otherwise, I'm guessing I'd have a stonking ~£35K stamp duty bill! Impressive for helping a family member!

David

00ec25

you have a simple mathematical either / or situation

either: remove yourself from the deeds and trigger a Capital Gains Tax "disposal" on your share of the London flat.

or: keep the flat and pay the SDLT higher rate on the house

one option will be cheaper than the other.....

dcrep

Thanks 00ec25! Hadn't thought much about CGT.
I'm assuming there's no CGT if I plan to hand the property over to my family member? We're not planning to sell it...

scottishblondie

If your OH is going to keep their flat and be party to the purchase of the new house, you!!!8217;re going to be liable for the surcharge whatever happens with the property you!!!8217;re named on. Or will you be buying solely in your name?

Slithery

dcrep wrote: »

I'm assuming there's no CGT if I plan to hand the property over to my family member?

Incorrect.

As you're connected persons CGT will be calculated using the current market value of the property. Presuming that you've never lived in this property then as this is a London property that you've owned over 20 years I'm guessing that the CGT due would be substantial. If you can give us the value and date when it first came into your possession, the current value and date you're planning to get rid of the property we can work this out.

thelem

Am I correct in understanding that the property you want your name removed from is the main residence of your relative, but you live elsewhere? Would that affect what capital gains tax is due?

AnotherJoe

No it would not affect what CGT is due.

dcrep

scottishblondie wrote: »

If your OH is going to keep their flat and be party to the purchase of the new house, you!!!8217;re going to be liable for the surcharge whatever happens with the property you!!!8217;re named on. Or will you be buying solely in your name?

I was planning to buy a new property in my own name.

dcrep

Slithery wrote: »

Incorrect.

As you're connected persons CGT will be calculated using the current market value of the property. Presuming that you've never lived in this property then as this is a London property that you've owned over 20 years I'm guessing that the CGT due would be substantial. If you can give us the value and date when it first came into your possession, the current value and date you're planning to get rid of the property we can work this out.

About £65K value in Jun 1998 when it came in our joint possession (when I was added). I'm seeing current values around £275K.

As mentioned before, I'm not really planning to gain/leverage on this increase, but trying to get as much advice/tips/be forewarned as I can...before I proceed.

Slithery

As a (very) rough calculation, assuming your share is %50 and you've never lived in the property then your CGT bill when you dispose of the property (even if giving it to family) would be around £20k-£40k depending on your tax status.

dcrep

thelem wrote: »

Am I correct in understanding that the property you want your name removed from is the main residence of your relative, but you live elsewhere? Would that affect what capital gains tax is due?

I live elsewhere and now so does my relative - taken a new job abroad.