Higher Stamp Duty(?) and Divorce

davidt1980

Hi Everyone,

I'm just in the very last stages of the divorce and we are waiting for the Consent Order to be signed by the judge. I moved out of the family home 3 years ago. I still pay 50% of the mortgage to my ex wife and then the mortgage comes out of her account. We have agreed on a 67/33 split in her favour. The house will not be sold for at least 8 years due to our children being young.
Anyway, I have just had an offer accepted on a house and will in the coming few months be liable for the dreaded SDLT - will I be liable for the higher 3% 'additional property' SDLT or will I just pay the standard?
Any advice is welcome as I keep reading conflicting things.

need_an_answer

What is the value of your 33% on the existing house?

davidt1980

need_an_answer wrote: »

What is the value of your 33% on the existing house?

According to Zoopla's inflated estimated valuation 33% would be £65k give or take taking off the balance of the mortgage.

TBagpuss

Yes, you are already a property owner so you will pay the higher level.

However, if the property was transferred into your wife's name and you had a second charge over it to secure the % due to you, then I don't think you would pay the higher SDLT rate but you may have to pay CGT when you receive your lump sum

davidt1980

TBagpuss wrote: »

Yes, you are already a property owner so you will pay the higher level.

However, if the property was transferred into your wife's name and you had a second charge over it to secure the % due to you, then I don't think you would pay the higher SDLT rate but you may have to pay CGT when you receive your lump sum

Thank you for clearing that up for me. I kept reading conflicting things about ‘it the house wasn’t my main residence’ I wouldn’t have to pay the higher rate and the last thing I want is a tax bill fall on my carpet in 6 months time!

tom9980

I think there may be an exemption for a court ordered divorce settlement where you may not have to pay extra, the forums normal SDLT experts have yet to reply.

A common scenario that arises in a financial settlement is where one spouse moves out of the family home and buys their own property, leaving the remaining spouse in the family home. To make the overall settlement fair and reasonable, the departing spouse may retain an interest in the family home and when it is sold at a future date, they receive an agreed share of the sale proceeds. The purchase of the second home by the departing spouse whilst retaining an interest in the family home potentially falls foul of the 3% SDLT surcharge rules.

However, the rules have been amended to provide an exemption from the SDLT 3% surcharge for the departing spouse in certain circumstances.

The conditions for the exemption to apply provide that the agreement between the spouses must be recorded in a consent order approved by the court. If an agreement is reached between the spouses and it is not formerly approved by the court, the exemption will not apply and the 3% surcharge will be due on the purchase of another residential property by the departing spouse.

https://www.crippspg.co.uk/tax-traps-on-separation-and-divorce/

SDLT_Geek

Yes, a property subject to a “property adjustment order” does not “count against” the person who no longer lives in the property for the purposes of the higher rates of SDLT.