No Beneficial interest and SDLT

n1ck_w87

Hi everyone - I've got a question about SDLT that no amount of googling has got me any closer to answering!

I have been offered the opportunity to purchase the house I am currently renting and living in from my parents in law. This would be my main residence and is located in England.
In February 2014 I purchased a leasehold flat in London with my sister in which I owned a 34% stake. In Sept 2017 I sold my share to my sister and we have both signed to declare that I have no longer have any beneficial interest in the property. I am however still on the title and the mortgage. The flat is rented out, the mortgage company are aware. I can prove that I have had no financial input into the flat since Sept '17 and that I have not received any rental income.

Obviously I am keen to avoid paying the higher rate of SDLT upon purchasing the other property.

Withe reference to SDLTM09785, would our declaration of my no beneficial interest in the flat be enough to absolve me from the higher SDLT rate when buying the house despite being named on the title and mortgage?

If not, are there any steps I can take which would prove that I have no beneficial interest?

Thank you in advance!

xylophone

In Sept 2017 I sold my share to my sister and we have both signed to declare that I have no longer have any beneficial interest in the property. I am however still on the title and the mortgage.

Why has the property not been transferred into your sister's sole ownership?

Have you advised the mortgagee?

Was the property your PPR?

If not, was CGT due on the sale?

n1ck_w87

Why has the property not been transferred into your sister's sole ownership?
To avoid early repayment fees associated with remortgaging.

Have you advised the mortgagee?
Yes

Was the property your PPR?
Yes

AnotherJoe

Can she not port the mortgage?

n1ck_w87

AnotherJoe wrote: »

Can she not port the mortgage?

I'm not sure how that would help? She's not looking to buy another property.

xylophone

The mortgagee has formally released you from any obligation in respect of payment of the mortgage?

You have a legal document stating that you have no beneficial interest in the property?

If so, I'd be inclined to write

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/stamp-duty-land-tax

to obtain a definitive statement concerning your position.

System

As you are still on the deeds you are still technically part owner so you would have to pay the additional stamp duty. As long as you are removed with in a 3 year timescale you can the apply for a refund.


If she applied for a new mortgage with the same lender they may waiver or reduce the early redemption fee, worth asking the question

AdrianC

Simonr66 wrote: »

As long as you are removed with in a 3 year timescale you can the apply for a refund.

No, he can't - because it's not his primary personal residence.

OP - you do realise that by staying "on the mortgage", you are jointly and severally liable for the full debt if your sister fails to pay the lender...?

I suspect you're starting to realise the full false economy of trying to penny-pinch those mortgage fees.

allconnected

How did your sister buy your share?

Did she pay you cash? And if so did she pay stamp duty on this consideration paid for the 34% share she bought from you?



Or did you gift her your interest in the flat despite still owing the mortgage on it?

If the mortgage company come to you for repayment of the mortgage secured on the flat, would you expect the flat to be sold to pay it, despite having no beneficial interest in it? Or would you, as the arrangement you have described suggests, accept you would need to pay off the mortgage if your sister decides not to, while she’s still entitled to all the proceeds if the flat is sold? That’s what giving up beneficial ownership entails.

All connected

00ec25

Simonr66 wrote: »

As you are still on the deeds you are still technically part owner so you would have to pay the additional stamp duty.

incorrect. As OP has already stated, the HMRC SDLT manual makes allowance for a scenario where there is no beneficial interest in the property. If that condition is met the property is excluded for higher rate purposes.

Simonr66 wrote: »

As long as you are removed with in a 3 year timescale you can the apply for a refund.

"removal" of any legal interest would indeed meet the condition for having disposed of the property (should the lack of beneficial interest be rejected). However, as OP is purchasing a new property the correct wording re the 3 years is set out here:

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

Simonr66 wrote: »

If she applied for a new mortgage with the same lender they may waiver or reduce the early redemption fee, worth asking the question

reasonable idea, no harming in trying

Tom99

Providing your 'both signed to declare that I have no longer have any beneficial interest' does what you think it did then you would not be liable for the extra 3%.
Was this via a witnessed and dated deed or some other method? Was a cash consideration given and how was this documented.