SDLT, maybe higher shocker!

lowsideoftheroad

xylophone wrote: »

But the wife still owns 25% of the pied a terre ( an interest acquired by inheritance and gift)


Therefore House A (although it will be the PPR) is a second property and the higher SDLT may apply?

I now think so yes. Unless we complete by Nov 26th.
I'm (obviously) a bit naive about this, but I'm curious what the slowest tasks within the lawyer's conveyancing duties are.

00ec25

lowsideoftheroad wrote: »

So that’s how I originally read that statement on the GOV website, but having re-read it, I think that it suggests Home B would only still count as our PPR if we had sold it and THEN rented somewhere (for less than 7y), then bought Home A. That’s not what we did. We rented (for six years) after moving away for work, but only recently sold Home B.
My solicitor is also taking the strict interpretation of that clause, FWIW.

no. the requirement for replacement is that you must be disposing of a major interest in a property used as the main home

Finance Act 2016 section 183 schedule 4ZA para 2(4)
"For the purposes of this Schedule any term of years absolute or leasehold estate is not a “major interest” if its term does not exceed 7 years on the date of its grant."

a typical rental property is let under an AST agreement, it is extremely unlikely to be for a 7 year term (see PS below) so can never be a major interest. Therefore the rental is ignored as that cannot be an interest "disposal" and therefore the most "recent" disposal is that of the ex main home (despite the fact it has been let for many years and was sold whilst living in a rental property).

that is precisely why the 26 Nov 18 clause was introduced when the SDLT rules were amended back in Nov 2016 (after their initial introduction in April 16). By adding the requirement for occupation as actual main residence within the 3 years before sale, it closed that loophole. Obviously, if you sell after that date you do not meet that clause, sell before, and you do.


PS it is the length of the discrete tenancy agreement, not how long you rented it for, which the 7 years refers to.
A tenancy agreement/contract has a start and end date. Only where the contract period is for 7 years or more would that agreement fall under the 7 year rule. If, in contrast, you simply had a succession of tenancy contracts over a 7 year period, you would not have had a tenancy of 7 years or more, you would have had, for example, 7 x 12 month tenancies or 14 x 6 month tenancies.

Where a tenancy agreement is for 7 years or more from the outset it is a very different kettle of fish in legal terms to a "normal" assured shorthold tenancy (AST), hence that distinction is made re SDLT.

00ec25

lowsideoftheroad wrote: »

I now think so yes. Unless we complete by Nov 26th.

yes, as was said back in posts #11 & 12

complete before 26 Nov, higher rate NOT applicable due to replacement of main residence (intervening rental "home" ignored)

complete after 26 Nov, higher rate is applicable due to fact wife has a major interest worth >£40,000 comprising 12.5% in an additional property arising from the gift (the other 12.5% is ignored since it was an inheritance less than 3 years ago)

getmore4less

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? If not but you are still within 2yrs of the date of death a DOV would still be valid.
[/FONT]

With DOV you have to be careful IHT and GGT have specific benefits as if the gift was an inheritance, not other(all?) taxes.