SDLT liability when moving in with partner

mzeep

My girlfriend is looking to buy her first property. She will buy this with her own deposit and raise the mortgage herself.

We have discussed that if, in the future, I move in with her, I would contribute towards half the mortgage costs.

I already own a property myself which is my current residence. I would like to retain this property, and would let it out if I moved in with my girlfriend.

I understand that if I was able to join my girlfriend’s mortgage, I would need to be (and indeed would want to be) added to the property deed, and as a consequence would be liable to pay second home stamp duty.

I want to understand whether my stamp duty liability would be based on the value of my girlfriend’s property, or on my half of the mortgage only, and what are the implications on any equity I invest?

Can anyone please clarify?

:money:

da_rule

It will be based on the consideration you are giving. This may therefore be the value of any debt that you are assuming as well as any cash that your girlfriend.

AdrianC

mzeep wrote: »

My girlfriend is looking to buy her first property. She will buy this with her own deposit and raise the mortgage herself.

We have discussed that if, in the future, I move in with her, I would contribute towards half the mortgage costs.

I already own a property myself which is my current residence. I would like to retain this property, and would let it out if I moved in with my girlfriend.

I understand that if I was able to join my girlfriend’s mortgage, I would need to be (and indeed would want to be) added to the property deed, and as a consequence would be liable to pay second home stamp duty.

I want to understand whether my stamp duty liability would be based on the value of my girlfriend’s property, or on my half of the mortgage only, and what are the implications on any equity I invest?

You own property A.
If you buy a %age share in property B from the previously 100% owner, +3% SDLT will be due on that purchase = that % of the property value at the time.

There is no "implication" on the equity. You will have that %age share, and the equity will be whatever's left after any mortgage is paid off.

Buying a share of the property from her is different to "contributing to the mortgage".

mzeep

da_rule wrote: »

It will be based on the consideration you are giving. This may therefore be the value of any debt that you are assuming as well as any cash that your girlfriend.

Thanks da_rule. The end of your sentence is cut off. I assume you were going to say 'any cash that your girlfriend has paid as a deposit'?

Tom99

[FONT=Verdana, sans-serif]If you manage to become joint owners as tenants in common you will need a deed of trust, to set out how the net proceeds of a subsequent sale are divided.[/FONT]
[FONT=Verdana, sans-serif]Assuming your girlfriend put down a deposit of 30% of the total costs, incl fees, of the purchase and you come along later and just contribute 50% of the mortgage, then the DOT might say something like this:[/FONT]

[FONT=Verdana, sans-serif]On the sale of the property and after paying the sale costs and redeeming the mortgage the proceeds of sale shall be split as follows:[/FONT]
[FONT=Verdana, sans-serif]Party A – 30% of the gross sale price less costs of sale[/FONT]
[FONT=Verdana, sans-serif]The remainder – Split 50%/50% between Party A and B[/FONT]
[FONT=Verdana, sans-serif][/FONT]
[FONT=Verdana, sans-serif]The above formula is dynamic and the exact %age of the net proceeds each party gets will vary over time as the house increases in value and the mortgage is paid off.[/FONT]
[FONT=Verdana, sans-serif]If you are to refund some of you girlfriend's deposit, or the property has risen in value or you girlfriend has repaid some of the mortgage capital, the above formula will need adjusting accordingly.[/FONT]

hazyjo

Wouldn't it be better just to pay half bills and not the mortgage/deeds? Will she be going on the deeds of your property?


How long have you been together? Would it be worth waiting a year or two and then think about buying together/selling yours?