Avoiding additional LBTT in Scotland

easty

A friend of mines owns a property with his ex, they're seperated but amicable. They rent the property out at the moment.

He's now thinking of buying another place, for him to live in. I asked him if he was aware that because it'd be his second property, he'd have to pay additional Land and Buildings Transaction Tax on it. He said he was aware, and he was planning to sign the flat he shares with his ex over into her name solely, with a legal minute signed saying half of it belongs to him.

I've advised him against it. I'm not convinced it's a good idea at all. Can you even have a claim over a property with a "legal minute". I'd thought it was Disposition only, that stated who owned the property?

davidmcn

Pretty much. Where is he getting his "advice" from?

easty

davidmcn said:

Pretty much. Where is he getting his "advice" from?

He says he got advice from a mortgage broker.

He says it'll be fine because he trusts her. I just think that it's a dangerous move.

davidmcn

easty said:

davidmcn said:

Pretty much. Where is he getting his "advice" from?

He says he got advice from a mortgage broker. 

He says it'll be fine because he trusts her. I just think that it's a dangerous move. 

I wouldn't expect a mortgage broker to know a great deal about LBTT.

And if he trusts his ex then he wouldn't need her to sign the side agreement, would he?!

He should speak to his solicitor about it. The anti-avoidance rules are stricter for LBTT than for SDLT, so transferring it to his ex's sole name might not work if there's no reason for doing it other than avoiding LBTT. Why did they keep the property in joint names anyway?

easty

davidmcn said:

easty said:

davidmcn said:

Pretty much. Where is he getting his "advice" from?

He says he got advice from a mortgage broker. 

He says it'll be fine because he trusts her. I just think that it's a dangerous move. 

I wouldn't expect a mortgage broker to know a great deal about LBTT.

And if he trusts his ex then he wouldn't need her to sign the side agreement, would he?!

He should speak to his solicitor about it. The anti-avoidance rules are stricter for LBTT than for SDLT, so transferring it to his ex's sole name might not work if there's no reason for doing it other than avoiding LBTT. Why did they keep the property in joint names anyway?

I don't think either want to give the place up. My friend would love to buy her out of it, but he wouldn't get a mortgage that size on his own. It's great flat in a great location. It's only going to go up in value.

amnblog

Sounds like Tax Evasion.
A Mortgage Broker should not be giving Tax Advice.
If they are, I wouldn't trust them for much else.

[Deleted User]

Sounds very much like the mortgage broker has overstepped their advice remit.  Brokers have a general knowledge on how it all works but the phrase 'a little knowledge is a dangerous thing' exists for a reason. 

Get mortgage advice from a mortgage broker
Get tax advice from a tax advisor or a solicitor qualified to give advice in this area.