SDLT, maybe higher shocker!

00ec25

lowsideoftheroad wrote: »

I didn't want to get distracted by the inheritance rules on higher SDLT, which don't apply here, to the best of my understanding. It's not a get out.

Why do you say that? The reason you are here is because your wife owns a share in what you describe as an inherited property. That is what makes her potentially purchasing an additional property and thus facing higher rate

Tom's query is valid, what do you mean by "sort of inherited" ???

if she genuinely inherited it, then her share is less than 50% and so will be ignored as it is less than 3 years ago, hence Tom quotes the rules here:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795

the inheritance rule is independent of the 26 Nov 18 deadline for replacing a main home, which you will almost certainly miss given what you say. So you you are indeed looking for an "out", and that out will be the inheritance rule, not the replacement main residence rule because miss the 26 Nov deadline and you will pay higher rate as you will fail the replacement rule, that is clear.

00ec25

G_M wrote: »

Yes covered before....

Hi GM, you need to research SDLT a bit more, you said

No. Your previous 'main residence' is the property you currently rent to live in. You are not selling this.

the law says:

Renting while replacing a purchaser’s only or main residence
An assured shorthold tenancy taken between the sale of the old property and purchase of the new property will be ignored so long as the tenancy is not granted for a term of more than 7 years.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

lowsideoftheroad

Tom99 wrote: »

OK, I was referring to the 3yr inheritance rule. Was the 25% 'sort of inherited' inherited following the death of an individual or was it a gift from a living person?

So a bit complex. She inherited 12.5% and was then gifted a further 12.5% from her parents (who were also beneficiaries of the will). So that’s why I figured that it wouldn’t qualify as a higher SDLT exemption. Again, I could be wrong.

lowsideoftheroad

00ec25 wrote: »

Hi GM, you need to research SDLT a bit more, you said

the law says:

Renting while replacing a purchaser’s only or main residence
An assured shorthold tenancy taken between the sale of the old property and purchase of the new property will be ignored so long as the tenancy is not granted for a term of more than 7 years.


Yes, thanks - I did notice that statement. The thing is that we have only recently sold Home B. We have been renting while STILL owning Home B. We are also still renting now...we never lived in the flat. So I’m not sure that statement is applicable as an exemption for us, and our solicitor didn’t think so either. Which is annoying.

Tom99

lowsideoftheroad wrote: »

So a bit complex. She inherited 12.5% and was then gifted a further 12.5% from her parents (who were also beneficiaries of the will). So that’s why I figured that it wouldn’t qualify as a higher SDLT exemption. Again, I could be wrong.

[FONT=Verdana, sans-serif]If the 12.5% was transferred to her less than 3yrs ago I don't see why a claim on that amount should fail just because another 12.5% has been acquired.[/FONT]
[FONT=Verdana, sans-serif]Did the 12.5% coming from parents come via a deed of variation to the parents inheritance in the Will, if so I think the whole 25% would count as inherited? If not but you are still within 2yrs of the date of death a DOV would still be valid.
[/FONT]

lowsideoftheroad

SDLT_Geek wrote: »

If you can complete the purchase of Home A by 26 November 2018 I would expect the purchase to escape the higher rates. Even though your wife has a share in another property "counting against her" (Condition C is fulfilled) she should escape on the basis that of the replacement exception (she fails Condition D).


Transitional provisions apply up to 26 November 2018 so that the three year rules do not always apply (so it would not matter that she did not live in Home B within the three years before buying Home A).

That’s exactly what I thought, thanks. Unlucky timing...

lowsideoftheroad

Tom99 wrote: »

[FONT=Verdana, sans-serif]If the 12.5% was transferred to her less than 3yrs ago I don't see why a claim on that amount should fail just because another 12.5% has been acquired.[/FONT]
[FONT=Verdana, sans-serif]Did the 12.5% coming from parents come via a deed of variation to the parents inheritance in the Will, if so I think the whole 25% would count as inherited?[/FONT]

Ahhhh, I don’t know. I wasn’t really involved. I think it was a two step process - if this is mission critical info, I should definitely try to find out.
I think what happened was the flat was originally left to 8 cousins. My in-laws bought the 50% owned by the other-side cousins, and then distributed the share between their four children, resulting in a 25% share for each.
I think, ironically, this was thought to be a tax efficient process.
Insert your own picture of smoking gun pointing at my foot.

Tom99

lowsideoftheroad wrote: »

Ahhhh, I don’t know. I wasn’t really involved. I think it was a two step process - if this is mission critical info, I should definitely try to find out.
I think what happened was the flat was originally left to 8 cousins. My in-laws bought the 50% owned by the other-side cousins, and then distributed the share between their four children, resulting in a 25% share for each.
I think, ironically, this was thought to be a tax efficient process.
Insert your own picture of smoking gun pointing at my foot.

[FONT=Verdana, sans-serif]I think you should find out. You said earlier that your in-laws inherited under the will but above you say they purchased the 50%?[/FONT]

lowsideoftheroad

AdrianC wrote: »

I presume your wife is getting the benefit of a quarter of the rent of this London flat, albeit paying a quarter of the costs...?

She has indeed been paying a quarter of the costs, but yet to receive any rent, since it’s mainly been used by her siblings while they do a bit of renovation of their own properties. Not exactly a BTL cash-cow for us. We were a bit indifferent to the plan really, but got talked into it. It was a generous welcomed gift/inheritance to start with, didn’t see the higher SDLT thing coming. Our bad.

lowsideoftheroad

Tom99 wrote: »

[FONT=Verdana, sans-serif]I think you should find out. You said earlier that your in-laws inherited under the will but above you say they purchased the 50%?[/FONT]

Yeah, I need to do some digging. Thanks - I will update you. Assuming that they did purchase and then gift the 50%, I guess that it doesn’t satisfy the higher SDLT exemption though?