Additional Stamp Duty on joint purchase

Wonderkamp

Hi all,

Wife and I got married in 2018 and both owned a flat each. Plan was to sell my flat and move to hers whilst we looked for a joint family home, then eventually selling hers to keep the mortgage to a minimum. I found a buyer for my place so that process started to happen.

However as we started to look for houses we found a place we absolutely loved last summer and realised we wouldn't have time to market and sell her property quickly enough. So we opted for a let to buy mortgage on her place to release additional capital to use as a deposit, and then rent her place out. She has no pension so this also made sense as a longer term asset. 

I assumed we would need to pay the additional stamp duty on our joint house purchase and had budgeted for this, but the conveyancer originally sent an estimate through with the lower amount applied. I queried this and they corrected their statement and the purchase went through all fine. Very happy in our new home! 

However reading these forums now can I just make sure I was right about the higher amount of Stamp duty??! I always assumed the additional rate was payable but now confused about main residence rules etc. 

Thanks! 

Doozergirl

Where did you both live and when, and what did you sell and when, in relation to the marriage date? 

oldbikebloke

much easier to present SDLT questions as simple list of facts and timeline:

he owns A
she owns B
"you" are married - in which property did you live as a married couple and from when given  you got married in 2018?
"you" have purchased C as joint owners
property B is retained in ownership and now let 
what happened to A?

on the face of it "you" as a couple went from owning 2 properties to owning 3, so of course higher rate is due, as "you" now own an additional property. The only way it would not be is if A was the marital main home from 2018 and was sold on/before date of purchase of C, as that would mean "you" had replaced the main home (A) with C, so no higher rate due under the replacement rule 

Wonderkamp

Thanks so much for your replies. I will try and make it easier:

4 years ago when we met we each owned our own flat.

Married in Dec 2018.

Continued initially with both flats due to work/family locations until we worked out what to do and where to live but stayed mainly in Wife's flat.   

June 2019 Put my flat (Property A ) on the market. Found a buyer immediately. Intention was to move permanently into wife’s flat (Property B ) and eventually sell this to buy family house (Property C ).

August 2019 before my sale completed we found perfect family home (Property C ) and realised needed to offer straight away. Property B is ex-Local authority so selling was going to be long and time consuming – looked into renting out and releasing equity instead. Found suitable Let-to-Buy mortgage to do this. Put offer in on Property C and this was accepted.

October 19 exchanged contracts on both Property A (selling) and Property C (purchase).

Dec 19 on the same day Completed Sale of Property A, Let-to-Buy Equity release of Property B and then onward Purchase of Property C.

So now happy ever after living in Property C and rent out Property B to cover let to buy mortgage. 

So there have only ever been ownership of 2 properties at any one time. Does that make sense??!

greatcrested

Wonderkamp said:

* 2015 we met we each owned our own flats A & B

* Married in Dec 2018.

* Continued initially with both flats - A isOP's main residece. B is wife's main residence

* June 2019 Put Property A  on the market.

* August 2019  found perfect family home (Property C )

* Found suitable Let-to-Buy mortgage for Property B (presumably A is now main residence for both?)

.* Put offer in on Property C and this was accepted.

* October 19 exchanged contracts on both Property A (selling) and Property C (purchase).

* Dec 19 Completed Sale of Property A (main residence), Let-to-Buy Equity release of Property B and then onward Purchase of Property C.

* now living in Property C and rent out Property B to cover let to buy mortgage.

You replaced your main residence A with new main residence C.

Additional SDLT no applicable.

SDLT_Geek

Do not believe anyone who says that a married couple are treated “as a unit“ for this purpose. You need to apply the conditions for the 3% surcharge to each of you individually. If for either of you the extra 3% would be due, then the 3% is due for the transaction as a whole.

Looking at your wife, it seems the 3% would apply to her, because she retains her property B. She cannot rely on the sale of your property A because she never lived in it as her only or main residence (she seems, from what you say, to have lived in her property B as her only or main residence).

It seems that if she sells or otherwise fully disposes of property B within three years, then the two of you will be entitled to reimbursement of the 3% surcharge. 

greatcrested

The crux is whether B was wife's main residnce, or whether A was.

I and SDLT_Geek came to different conclusions on this from your description, but you were not very definitive.

SDLT_Geek

Yes, it comes down to where the wife was living.  I read “stayed mainly in Wife’s flat”.  That seemed to me to answer it.

Wonderkamp

Thanks all for your help!

We were both paying our own council tax on a single occupancy basis on flats A and B so I am not sure how we would prove what the main residence was before we bought property C.

Probably a case of being too honest and perhaps when I got the original quote I should have kept schtum....! 

SDLT_Geek

Although I understand a married couple can only have one main residence for capital gains purposes, the rules for SDLT are different.  The two people need to be looked at individually.  It is possible (though unusual) for spouses to have different main residences for SDLT purposes.  The critical issue in OP's case is which property (or properties) OP's wife lived in as her only or main residence within the three years leading up to the joint purchase. 

oldbikebloke

Wonderkamp said:

Thanks all for your help!

We were both paying our own council tax on a single occupancy basis on flats A and B so I am not sure how we would prove what the main residence was before we bought property C.

Probably a case of being too honest and perhaps when I got the original quote I should have kept schtum....! 

moot point at the time?
although as said main residence for both CT and SDLT is not simply one out two properties must be the marital home, you said yourself mostly living in her flat
so if both were claiming single person discount after marriage both of you were somewhat economical with the truth when claiming that since the test applied for CT is a "matter of facts". Yes married couples can and do live what are effectively separate lives in separate properties with only a bit of paper saying they are a "couple" - maybe due to work locations v kids schools for example. You weren't, you were newly married and living together in her flat in all senses of the word (as man and wife in old money)

re SDLT:  B remains the wife's property. Your timeline implies wife has never lived in A at all.
I am with the geek on this, she has caused "joint purchasing couple" to face higher rate on C as she not replaced her home, as she never lived in the property which has sold. You on the other hand have as it was, at a point in time in the 3years prior to its sale, indisputably your own home as you only got married about 1 year before its sale in Dec 19 


(Even if you have paid the higher rate the taxpayer still loses anyway due to your prior council tax dodge)