Stamp duty

Neeo

STAMP DUTY MARE!

Me and oh buying our new house. Offer accepted, mortgage offered, about to exchange. Hit a new hurdle ! Me oh has her name on her sisters rental property mortgage. we send off TR1 to transfer name off. Now waiting for this to happen. HOW LONG CAN THIS TAKE AS HER SISTER IS TAKING EQUITY AND CHANGING MORTGAGE COMPANY.
We were told tax duty would be £400 but now due to her name still not off its costing another £4500 !!!!! Which we have not Got.

Will we be able to get a refund if we do pay to it. We are currently living with parents and don't own any other home. The house me oh has is a rental with her sister that They purchased 15 years ago.

Is it with asking vendor to drop the price by 4500 or wait 4-6 to complete the deal at same.price.


Please any help would be great as don't want to lose out on house after this long.

Tom99

Not sure but its possible since you have completed the transfer and are just waiting for that change to be registered that you would not be liable for the extra 3%. Others may know.
Have you taken into account your OH CGT liability on disposal of interest in the rental property?
Since the parties are connected CGT will be based on current market value, not whatever the sister is paying your OH for their share.

Doozergirl

Ask the Land Registry rep on here.

It might be stuck in the backlog.

SpiderLegs

I think this could go from stamp duty mare into capital gains mare quite easily after 15 years of gain.

OP - what are the numbers involved with this rental property?

00ec25

has OH received a share of the rent at any point in the last 15 years?

if yes, then, as above, she seems to have overlooked CGT on the disposal of her share of the rental property. Tax on that gain might make an extra 4.1k of SDLT look like a flash in the pan

AnotherJoe

No, you will not be able to get a refund if you buy and then later take the name off.
Yes of course you can ask for £4,500 off. As you could have asked for any amount off at any time. Why not £10k or £2k? The fact you've messed up with tax isn't an issue for the seller other than the delay. If it was me I'd tell you to jog on but who knows maybe they are desperate to sell.or maybe they will put it on the market again.
What's the deal with sister? Will you get some money in consideration of taking the name off? If so CGT may be payable as said 15 years isa long time, the property may well have risen substantially in value. Are you using that equity to help buy ?

davidmcn

Neeo wrote: »

we send off TR1 to transfer name off. Now waiting for this to happen.

What do you mean? If it's at the Land Registry then the transfer has already completed, you don't need to wait for registration to happen.

AdrianC

Neeo wrote: »

Me oh has her name on her sisters rental property mortgage.

Not quite - she's a joint owner...

We were told tax duty would be £400 but now due to her name still not off its costing another £4500 !!!!! Which we have not Got.

Yep. She currently owns one property, and is buying an additional property. +3%.

Will we be able to get a refund if we do pay to it.

Not unless the other property was her main residence in the last few years.

We are currently living with parents and don't own any other home. The house me oh has is a rental with her sister that They purchased 15 years ago.

"Don't own any other home... except that one..."

Is it with asking vendor to drop the price by 4500

It's not the vendor's fault your OH forgot she owned another house...

00ec25

AnotherJoe wrote: »

What's the deal with sister? Will you get some money in consideration of taking the name off? If so CGT may be payable as said 15 years isa long time, the property may well have risen substantially in value.

you have misunderstood

sister and OH are connected persons
it does matter one jot if physical money does, or does not, change hands

OH is no longer a listed owner of the rental property. Her sister is now sole owner having been gifted (or been bought out of - TBC) OH's share of the property.

As such OH has triggered a CGT "event" by disposing of her share at the market value of that share. The price paid (or nor if gifted) is irrelevant in a connected person disposal.
So OH has to do a CGT calculation as it obviously is not her main home and is liable for CGT

SDLT_Geek

Neeo wrote: »

Me and oh buying our new house. Offer accepted, mortgage offered, about to exchange. Hit a new hurdle ! Me oh has her name on her sisters rental property mortgage. we send off TR1 to transfer name off. Now waiting for this to happen. ……………………..
We were told tax duty would be £400 but now due to her name still not off its costing another £4500 !!!!! Which we have not Got.

Will we be able to get a refund if we do pay to it. We are currently living with parents and don't own any other home. The house me oh has is a rental with her sister that They purchased 15 years ago.
……………….
Please any help would be great as don't want to lose out on house after this long.

The answer to this might lie in the old chestnut of the difference between OH having a property in "her name" as one of the registered proprietors at the Land Registry with her sister and OH actually having a share of the ownership of that property.

The difference can also be put as the difference between being:
(a) A bare trustee / a nominee / a paper owner / a mere registered proprietor with no beneficial interest on the one hand and
(b) A beneficial owner / underlying owner / beneficiary / holder of a share in the real economic ownership of the property on the other hand.

It might help OP to read what HMRC say about "bare trusts" in the guidance on the 3% surcharge here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09815

It is quite possible that OH's "name is on the title" of her sister's property and she is liable on her sister's mortgage, but OH has no beneficial interest whatsoever in that property. This structure is sometimes adopted to help a family member secure mortgage finance whilst remaining fully entitled beneficially to the property. The position would normally be clarified one way or the other on the transfer made 15 years ago when the property was purchased or on a declaration of trust made at the time.

Some consequences which might follow from OH not only having her "name on" the title and mortgage but also having a share in the property are:

• She would be entitled to a share of sale proceeds if they exceed the secured loan and expenses
• She would be entitled to rent and that should be taken into account for income tax
• If that share is now being disposed of she should check what capital gains tax is due
• If a gift of the share is being made there might be inheritance tax consequences
• If she still owns that share when OP and OH buy a new property the 3% extra SDLT will be due and will not be recoverable even if OH later disposes of the share.

Some consequences which might follow from OH not having a share in the property are:

• She would not be entitled to a share of sale proceeds of her sister's property
• She would not be entitled to rent
• There is no share is now being disposed of for capital gains tax purposes
• When OP and OH buy a new property OH's sister's property does not "count against them" for the purposes of the 3% extra SDLT.

Neeo

The OH is not getting no capital from the OP. Her sister is taking all the equity and her new mortgage company wants to complete searches etc. This will delay the name coming off the mortgage.
My concern is that this will take too long for removal and the deal can fall through.?? How long can this take?

're the 2nd home tax I am worried that if I pay then apply for a refund it gets refused.