Stamp duty - Staircasing and Second Home

patela_2

Hello - I need some help with a stamp duty calculation based on a unique situation (at least I can't find any such examples online)

I purchased a shared ownership flat in London in 2008 which had a value at the time of 191,000. I purchased a 50% share valued at 95,500. From my records it looks like I paid 955 in stamp duty (which doesn't make sense now since the purchase price was below the £125000 threshold at the time so should have been 0).

I am now looking to purchase the other half. This flat would now be my second home (at the time 2008 I was a first time buyer) so I assume will be in the higher rate of stamp duty. The flat is now valued at 350,000 so the share I am purchasing is 175,000.

I need some help with the stamp duty calculation. Here are my calculations:

The total purchase price would be 270,500 (95500+175000). With an approportioned rate of 0.646 (175000 purchase price of second 50% divided by total purchase price of 270,500)

Taking the 270,500 into consideration and the approportioned rate this would give a stamp duty of 7519.44. This is based on the higher thresholds of 3,5 and 8 percent. At the time the flat was my only home, I have since purchased another home which is my main residence and this flat will be let out.

Does this calculation seem right? My solicitor has asked my calculations as we cannot find any examples like this.

Thanks!

tlc678910

Hi,
I think it is important that you work out what stamp duty you paid when you bought your property and why as if you paid a "market value election" based on the whole cost of the property at the time stamp duty is not due when you buy further shares. https://www.gov.uk/stamp-duty-land-tax/shared-ownership-property

You can find the old stamp duty rates here https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax but I am struggling to work out why the stamp duty was £950.

Tlc

haras_nosirrah

The calculation is a difficult one and I wouldn't rely on what someone here says - check with the solicitor and they can check with hmrc if they aren't sure.

With the stamp duty on purchase there are times when even though the share is less than the 125k some stamp duty is generated. It is related to the amount of monthly rent and the length of the lease.

00ec25

haras_nosirrah wrote: »

The calculation is a difficult one

? yet you say you specialise in shared ownership mortgages?

as the first poster observed, if OP has paid SDLT at time of purchase then they could very well have made a market value election since they state that the share purchased at that time was <the sdlt threshold

£955 paid in 2008 looks to be too much and possibly includes solicitor fees or similar since a market value election on a property worth 191 in 2008 would have cost:
191,000 - 125,000 = 66,000 x 1% = £660 payable
OP appears to have paid an additional £295 above what would have been the SDLT due on a market value election at that time

https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax

as for how difficult a staircase calculation is, it isn't, you just read and apply the examples:
https://www.gov.uk/guidance/sdlt-shared-ownership-property
which is exactly what OP has done to come up with their calculation

haras_nosirrah

00ec25 wrote: »

? yet you say you specialise in shared ownership mortgages?

as the first poster observed, if OP has paid SDLT at time of purchase then they could very well have made a market value election since they state that the share purchased at that time was <the sdlt threshold

£955 paid in 2008 looks to be too much and possibly includes solicitor fees or similar since a market value election on a property worth 191 in 2008 would have cost:
191,000 - 125,000 = 66,000 x 1% = £660 payable
OP appears to have paid an additional £295 above what would have been the SDLT due on a market value election at that time

https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax

as for how difficult a staircase calculation is, it isn't, you just read and apply the examples:
https://www.gov.uk/guidance/sdlt-shared-ownership-property
which is exactly what OP has done to come up with their calculation

I do specialise in shared ownership mortgages - the clue being the word mortgages.

While based on the calculations given I believe he is right (although the initial stamp duty doesn't look right unless the lease generated a stamp duty liability based on the rent payable and the length of the lease which is a possibility) however I have said to get the solicitor to check the calculations with hmrc. We are not allowed to give advice on here and telling someone that the stamp duty is correct which he bases his savings and calculations on and then it turns out to be wrong could mean that he suddenly has to come up with additional money from somewhere with little to no notice. I am just saying it isn't a calculation which can be given easily on an online calculator unlike a straightforward stamp duty question therefore I would ask the professional you are paying to advise you to double check the figures before committing your money