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Stamp Duty Issues

edited 30 November -1 at 12:00AM in House Buying, Renting & Selling
8 replies 446 views
ryanx909ryanx909
4 posts
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edited 30 November -1 at 12:00AM in House Buying, Renting & Selling
Hi all,
Bit of a common situation that has given rise to some peculiarities.
So relationship breakdown involving a jointly owned property - formerly main residence A.
I left the property in 2018 and have since purchased a main residence B as of November '19 with the additional 3% SDLT of just under £4k.

I am the proud owner of a court order now giving me full control of the sale of A due to ex's unreasonable behaviour. However, given the state she has left the property in (it's too awful to go into detail) I need to empty, clean and fix it to make it sellable.

Oddly we had agreed that she would pay the mortage in full until sale. I know...

I have tried repeatedly to contact HMRC for clarity but am just being cut off due to high call volume.

Anyway, my questions are as follows:
1. It was suggested to me during meetings with my solicitors that seeing as A has not been my main residence since August '18 this could be grounds for a stamp duty refund. I can prove residency elsewhere with copies of the electoral role from my local authority. I am aware this is easily faked. So is the liability based on simply ownership or where I;m actually living or both?

2. If for some reason the mortgage stops being paid, I can't afford to pay two mortgages in full. It seems pointless to pay half or even negotiate with the bank (Halifax) in this event as I have raised concerns about this and explained the circumstances. The shorter and way more polite answer than the one they gave me was : tough. We just want the money. Fair enough. So, in the event of not being able to pay the mortgage and the bank repossesses the property with a view to eventually sell, that would technically mean I am no longer the owner of A.
Would a repossession in some way disqualify me from the SDLT refund?

I am well aware that 2 is an extreme example but its not off the cards at this point. Obviously I would rather avoid that and the CCJ I would inevitably receive but I've no real need for the ability to use credit for anything major in the next few years.

Apologies for the massive essay but I'd really appreciate any and all advice.

Thanks,
Ryan

Replies

  • Lover_of_LycraLover_of_Lycra
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    ryanx909 wrote: »
    Hi all,
    Bit of a common situation that has given rise to some peculiarities.
    So relationship breakdown involving a jointly owned property - formerly main residence A.
    I left the property in 2018 and have since purchased a main residence B as of November '19 with the additional 3% SDLT of just under £4k.

    I am the proud owner of a court order now giving me full control of the sale of A due to ex's unreasonable behaviour. However, given the state she has left the property in (it's too awful to go into detail) I need to empty, clean and fix it to make it sellable.

    Oddly we had agreed that she would pay the mortage in full until sale. I know...

    I have tried repeatedly to contact HMRC for clarity but am just being cut off due to high call volume.

    Anyway, my questions are as follows:
    1. It was suggested to me during meetings with my solicitors that seeing as A has not been my main residence since August '18 this could be grounds for a stamp duty refund. I can prove residency elsewhere with copies of the electoral role from my local authority. I am aware this is easily faked. So is the liability based on simply ownership or where I;m actually living or both?

    2. If for some reason the mortgage stops being paid, I can't afford to pay two mortgages in full. It seems pointless to pay half or even negotiate with the bank (Halifax) in this event as I have raised concerns about this and explained the circumstances. The shorter and way more polite answer than the one they gave me was : tough. We just want the money. Fair enough. So, in the event of not being able to pay the mortgage and the bank repossesses the property with a view to eventually sell, that would technically mean I am no longer the owner of A.
    Would a repossession in some way disqualify me from the SDLT refund?

    I am well aware that 2 is an extreme example but its not off the cards at this point. Obviously I would rather avoid that and the CCJ I would inevitably receive but I've no real need for the ability to use credit for anything major in the next few years.

    Apologies for the massive essay but I'd really appreciate any and all advice.

    Thanks,
    Ryan

    You just need to dispose of property A, it doesn't matter how although it would be better for you not to have it repossessed. You can only have one main residence for tax purposes and it used to be A but now it's B so if you can get A sold you should be able to claim a refund.

    https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

    If the property is in a truly awful state have you considered putting it up for auction to get rid of it quickly?
  • ryanx909ryanx909
    4 posts
    Forumite
    First post on the forum Disabled
    Hey,
    Thanks for that - so it is about ownership for tax purposes. That's fine.

    I had considered auction for a quick sale. My only concern is the cost to insert the property can be quite high and there's no guarantee of a sale particularly with a reserve which I would need to cover the mortgage and other fees.

    The property itself needs a fairly simple roof repair. The bigger job is going to be cleaning up the mess left by her, her german shepherd and three cats; I'll leave that to everyone's imagination but I'm pretty sure its worse than you think.

    In which case the value would be negatively impacted if sold in it's current state and I would like to come away from this without owing anything. I'm not bothered about making money but it would be nice to be able to claim back my costs to get it into an sellable state.
  • edited 26 January at 10:48AM
    SDLT_GeekSDLT_Geek
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    edited 26 January at 10:48AM
    OP is still a joint owner of property A which OP lived in until August 2018. In November 2019 (well within three years of moving out of property A) OP bought property B to live in.

    OP had to pay the 3% extra SDLT on property B because of retaining a share in property A.

    OP has three years from Nov 2019 within which to totally dispose of property B [Edit: I had meant to say "dispose of property A", thank you allconnected] in order to be entitled to a refund of the extra 3% paid on property B.

    (a) It does not help in the slightest for SDLT that property A has ceased to be OP's main residence.

    (b) Repossession does not help OP, a share remains OP's property. But a sale within the three years pursuant to a repossession would be fine for SDLT. But OP does not want to "go there" surely?!
  • ryanx909ryanx909
    4 posts
    Forumite
    First post on the forum Disabled
    Thanks. As I said, repossession is a last resort but I can't afford 2 mortgages so it's a possibility however remote. I should have clarified that I am aware that a repossession doesn't automatically remove my ownership prior to sale.
  • Lover_of_LycraLover_of_Lycra
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    ryanx909 wrote: »
    Hey,
    Thanks for that - so it is about ownership for tax purposes. That's fine.

    I had considered auction for a quick sale. My only concern is the cost to insert the property can be quite high and there's no guarantee of a sale particularly with a reserve which I would need to cover the mortgage and other fees.

    The property itself needs a fairly simple roof repair. The bigger job is going to be cleaning up the mess left by her, her german shepherd and three cats; I'll leave that to everyone's imagination but I'm pretty sure its worse than you think.

    In which case the value would be negatively impacted if sold in it's current state and I would like to come away from this without owing anything. I'm not bothered about making money but it would be nice to be able to claim back my costs to get it into an sellable state.

    I can imagine the state of the place and it's giving me the dry boak. Have you looked into getting one of those extreme cleaning companies in to give you a quote, the kind of cleaning company used on programmes like "The Hoarder Next Door"? (I honestly don't know how they do it) and then send the bill to your ex.
  • OP has three years from Nov 2019 within which to totally dispose of property B in order to be entitled to a refund of the extra 3% paid on property B.

    Shouldn’t that be - within which to totally dispose of property A, not B? B is the new property, A is the “old” main residence
  • SDLT_GeekSDLT_Geek
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    Shouldn’t that be - within which to totally dispose of property A, not B? B is the new property, A is the “old” main residence
    Thank you allconnected, you are right. I have now made an edit to my earlier post.
  • ryanx909ryanx909
    4 posts
    Forumite
    First post on the forum Disabled
    Hey again.
    Yes I've considered a cleaning company but the ones I've talked to want to be paid either partially up front and certainly on completion - and rightly so.

    If it comes to that it's not an issue but I'm not going to fob them off onto her as she simply won't pay it and that just feels like I'm then the one ripping someone off and drawing them into what is already a rubbish set of circumstances.

    I'm pretty sure once cleaned and sold there should be some monwy coming back to cover these initial expenses as well as the SDLT refund.

    Anyways, thanks again for your advice - you've been super helpful.
    Ryan
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