SDLT question on gifted holiday cottage - impact on future purchase

WhiskeyOne

Hi,
I've quite a unique situation and I cannot seem to determine the correct answer from any guides so hopefully someone can help guide me a bit.

Basically my father would very kindly like to gift me my grandparents cottage as a holiday home - either the whole cottage or a 50% share of it. Would be worth 80-120k potentially. Its in my parents joint names and as part of their separation they would like to transfer my mothers share into my name or potentially both of their shares into my name.

I currently do not own a home - I've been desperately trying to build a large deposit as I'm hoping to get into a position to buy a flat in London next year. My concern is if I am gifted the cottage then I would be liable to paying the extra 3% tax on the flat in London, which amounts to a lot with London prices. Ultimately the cottage will never be a main residence (its very small and rural and in the borders) but given my current main residence is a rented flat I don't think I can rely on the sale of a previous main residence to be exempt from the additional SDLT on a London flat?

If the cottage is gifted into my name how might this affect any purchase I manage next year? Should my father have the cottage put into his name for time being and transfer after I have purchased a flat (his concern being the 7 year IHT time period impact)? Is there a difference if just 50% is put into my name vs 100%?

Sorry its just quite confusing how all these rules work but could end up costing me tens of thousands of pounds.
Appreciate any advice at all.

Many thanks.

chanz4

Question is do you own another property, if yes which you would then stamp duty on the new you will be liable

greatcrested

If you own or jointly own one property (ie the cottage) and then buy a 2nd property (ie as yourhome) you wil be liable for the 2nd property SDLT (additional 3%).

AdrianC

The one get-out would be if your share of the property is worth <£40k.

But put things in proportion... 3% of a half a million quid London purchase is £15k. And you're objecting to a £100k gift because of it.

WhiskeyOne

AdrianC said:

The one get-out would be if your share of the property is worth <£40k.

But put things in proportion... 3% of a half a million quid London purchase is £15k. And you're objecting to a £100k gift because of it.

From what I've read its not a simple question - there are a huge number of caveats and proofs etc required.

Not objecting to it at all - very grateful for it. I think I'm clear they'd like to gift it to me in any scenario as it's to be my inheritance (was always my grandparents wishes) but question of minimising my tax expense (especially as its a non-cash gift) from what is a complex tax situation and so sensible planning with my parents as to when to transfer would seem completely logical.

greatcrested

WhiskeyOne said:

AdrianC said:

The one get-out would be if your share of the property is worth <£40k.

But put things in proportion... 3% of a half a million quid London purchase is £15k. And you're objecting to a £100k gift because of it.

From what I've read its not a simple question - there are a huge number of caveats and proofs etc required.

The SDLT question you posed IS a simple question. There is no caveat or proof. Own one property over £40K and buy a 2nd - you pay the additonal SDLT.

[Deleted User]

Purchase London house first and second home stamp duty on cottage will be low.

davidmcn

AdrianC said:

But put things in proportion... 3% of a half a million quid London purchase is £15k. And you're objecting to a £100k gift because of it.

I presume from the reference to inheritance tax that they're going to get the cottage at some point anyway, it's just a question of what time makes most sense. I can't see any particular reason to rush in transferring it from dad unless there's genuine concern he's not going to live much longer - and even if there's only 3-7 years between the lifetime transfer and death, the amount of IHT due is reduced.

davidmcn

brett19852010 said:

Purchase London house first and second home stamp duty on cottage will be low.

It'll be zero if it's a gift, no matter when they do it.

[Deleted User]

davidmcn said:

brett19852010 said:

Purchase London house first and second home stamp duty on cottage will be low.

It'll be zero if it's a gift, no matter when they do it.

Ah I see. Even better. 

p00hsticks

davidmcn said:

brett19852010 said:

Purchase London house first and second home stamp duty on cottage will be low.

It'll be zero if it's a gift, no matter when they do it.

If it's never been a primary residence of the parents though, won't they potentially have CGT to pay at the point they gift it ? I think in the circumstances if I was the recipent I'd probably feel some moral obligation to at least contribute to that.