Shared Ownership - Stamp Duty - FTB

James131994

Hi all,

We are purchasing a shared ownership property, the value of the property is £320,000 and we are purchasing a 25% share. In the future we will be staircasing with a goal to be 100% owners. We are first time buyers.

My question is, how does stamp duty work, when is it payable when staircasing and what does our first time buyer status make us exempt from?

I understand that FTB are exempt from stamp duty up to £300k and then a 5% rate imposed between £300k and £500k.

I have asked our solicitor this question but his secretary has said it will be a while before I get a response and this is something I would like to understand now if possible. I would really appreciate a response.

Thanks!

SDLT_Geek

It sounds likely from what you say that you should be considering making the election to pay SDLT now on market value and "cash in" on your first time buyers status. That will mean paying £1,000 SDLT now, but will mean no more SDLT on staircasing, even when you staircase to over 80%.

You will find some information about it here https://www.blakemorgan.co.uk/news-events/blog/sdlt-first-time-buyers-relief/; see section 8 of the detailed pdf linked from there on shared ownership leases.

James131994

Thank you for your response. That does sound exactly like the kind of thing I was expecting so pleased I now fully understand the process, thank you for that article.

I assume I just need to let my solicitor know what I am electing to pay stamp duty now and they will handle this for me?

haras_nosirrah

The stamp duty changed to 500k for first time buyers buying under shared ownership in the last budget

James131994

Thanks for your reply Haras. Does that mean I won’t be paying any stamp duty at purchase or staircasing if the market value is £320k? Or does introducing the £500k mean I will still be paying 5%, from the previous article it looks as if I should be paying £1,000 if I elect to pay at purchase.

SDLT_Geek

The extension of the relief to some more transactions still only relieves the first £300,000 of the chargeable consideration.

The extension is not of relevance to you as, if you did not elect to pay SDLT on market value, your £80K initial payment would not have been liable to SDLT anyway.

If you do not so elect then SDLT is likely to be due when you staircase to over 80%.

James131994

Thank you. I understand. So I basically have a choice of paying £1,000 now or paying a larger amount of stamp duty at 80% staircasing. It seems to make much more sense to pay the £1,000 now so will do that.

Trying to budget for everything and this is definitely something I need to understand now so appreciate the help.