Stamp duty worries

succuba5

My parents bought a house in 2006 for 400,000 and put one of their names on it, mine and my two siblings as joint tenants. There's no mortgage on the property.

My husband and I are now buying a new home however we're concerned that we're now liable for a higher rate of stamp duty.

I've never lived in my parents house so it's never been a residence of mine. Would the higher rate still apply to us purchasing our new house? I've been trying to read up but I've not managed to get a straight answer!

Thank you for any help you can offer.

Mutton_Geoff

If you have a beneficial interest worth more than £40,000 in another property then you will have to pay an additional 3% higher rate on your next purchase.



https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09785

Grenage

My partner was in a similar position; she had her name taken off her mum's property before we purchased a house together.

AdrianC

succuba5 wrote: »

My parents bought a house in 2006 for 400,000 and put one of their names on it, mine and my two siblings as joint tenants.

So the four of you are equal joint owners of a £4-500k property, £100-125k each.

What was the logic behind them doing that...?

My husband and I are now buying a new home however we're concerned that we're now liable for a higher rate of stamp duty.

Yes, you are.

I've never lived in my parents house so it's never been a residence of mine.

Makes no difference.

Would the higher rate still apply to us purchasing our new house?

Yes, of course. You're a joint owner.

steampowered

We see many examples on these forums of amateur tax planning having unintended consequences. This is one such example I'm afraid.

Yes you would be liable for higher rate stamp duty as things stand. It is also worth noting that your parent's house would be at risk if you were ever to become bankrupt, given that you own a stake in it.

Do you know what your parents were trying to achieve by putting your names on the property?

It is likely that the best thing will be to get your names taken off the property. However you need to think about whether there would be any capital gains tax implications to doing this.

scottishblondie

succuba5 wrote: »

My husband and I are now buying a new home however we're concerned that we're now liable for a higher rate of stamp duty.

When you say "new" do you mean you're selling a current residence to buy a new one? Or is this your first purchase?

succuba5

Grenage wrote: »

My partner was in a similar position; she had her name taken off her mum's property before we purchased a house together.

Thank you, do you remember how long it took and if there were any capital gains tax to pay?

xylophone

My parents bought a house in 2006 for 400,000 and put one of their names on it, mine and my two siblings as joint tenants. There's no mortgage on the property.

Your parents are currently living in this property?

One parent plus three children own the property?

Thus the parent made a gift of £100,000 to each child?

You have never lived in the property and neither have your siblings?

Presumably the value of the property is now considerably greater than £400,000.


Edit - remove reference to extra SDLT - see post below.

If you gave /sold your interest to another party, there is a CGT liability to consider.

Why did your parents take this action?

Had they considered the implications of a gift with reservation of benefit?

Is the property currently owned as joint tenants or as tenants in common?

succuba5

AdrianC wrote: »

So the four of you are equal joint owners of a £4-500k property, £100-125k each.

What was the logic behind them doing that...?


Yes, you are.


Makes no difference.


Yes, of course. You're a joint owner.

It's their last house purchase and so they wanted us to each have a share

succuba5

xylophone wrote: »

Your parents are currently living in this property?

One parent plus three children own the property?

Thus the parent made a gift of £100,000 to each child?

You have never lived in the property and neither have your siblings?

Presumably the value of the property is now considerably greater than £400,000.

You are therefore liable to pay the higher SDLT.

If you gave /sold your interest to another party, there is a CGT liability to consider.

Why did your parents take this action?

Had they considered the implications of a gift with reservation of benefit?

Is the property currently owned as joint tenants or as tenants in common?

]Your parents are currently living in this property? Yes

One parent plus three children own the property? Yes

Thus the parent made a gift of £100,000 to each child? I guess so yes

You have never lived in the property and neither have your siblings? No

Presumably the value of the property is now considerably greater than £400,000. I think 500,000

You are therefore liable to pay the higher SDLT.

If you gave /sold your interest to another party, there is a CGT liability to consider.

Why did your parents take this action? They wanted us to each have a share of the house

Had they considered the implications of a gift with reservation of benefit? I don't know what that terminology means but higher rate stamp duty didn't exist when they did this

Is the property currently owned as joint tenants or as tenants in common? It's joint tenants

[Deleted User]

OP you really need to answer scottishblondie's question because it will make all the difference in terms of your SDLT liability.