Taking name off house - Stamp duty

Myfirsthouse

Hi all

I bought a house in 2011 with my 2 siblings as a future investment at the time.

I’m now wanting to remove my name from the deeds as I’m wanting to buy my own property for around £400k and don’t want to incur stamp duty costs of 20k+

What costs will incur during this process?

Will siblings have to pay stamp duty? Will it be on my share of 99k? Or today’s value? Will they incur capital gains tax? Anything other taxes? I’m really confused at the minute so was hoping to clear up these questions before I get in touch with a solicitor.

Thanks

TN1984

When you say 'remove my name from the deeds', do you mean sell them your share? I assume you are not gifting them your share as giving away a £99k asset to save a fraction of that in stamp duty would be a bit bizarre.

Your siblings will not pay capital gains tax if they buy you out, but you possibly will, depending on what you bought it for compared to what it is worth now.

Myfirsthouse

TN1984 said:

When you say 'remove my name from the deeds', do you mean sell them your share? I assume you are not gifting them your share as giving away a £99k asset to save a fraction of that in stamp duty would be a bit bizarre.

Your siblings will not pay capital gains tax if they buy you out, but you possibly will, depending on what you bought it for compared to what it is worth now.

Apologies, I should have mentioned the purchase price is 99k in total. Today’s value is around 150k

I won’t be losing any money in the process as I owe both of them money so we would come to a fair arrangement.

Not sure if selling it (showing exchange of money) would be more tax efficient or gifting it (clearing my debt) would be...

thanks for commenting 

AdrianC

Right now, you own a £99k share in a property.
Since that's more than £40k, any other property purchase will be subject to +3% SDLT.
+3% of £400k is £12k.

I presume you'd be selling it to them, rather than simply signing £99k away to save £12k - that'd be silly...

You may be subject to CGT on disposal of your share, depending on the value of your share when you got it.
If you dispose of your share to your siblings without getting the market value from them, then that makes no difference - the difference will be seen as a gift.
They will not be subject to CGT unless you all sell the property - then they'll be subject to it on any growth in their shares, not on yours.

SDLT_Geek

For the SDLT liability of your siblings, they need to account for (a) any cash they pay OP (b) any debt of OP’s forgiven (c) a proportion of any debt secured on the property.
I do not follow the figures.  Is OP’s one third share worth £99k?  Or £33k? Or £50k?  Or something else?

Myfirsthouse

My share is £33k. I guess today’s value has nothing to do with it as it was bought by 3 of us for 99k In total.

i have just read on the govt website:

If any of you will own, or part own more than one residential property worth £40,000 or more, you will have to pay the higher rates on your new purchase (unless there is another reason why the higher rates do not apply).

does this mean higher rate wouldn’t apply?

thanks for your replies. Sorry about the confusion 

SpiderLegs

Myfirsthouse said:

My share is £33k. I guess today’s value has nothing to do with it as it was bought by 3 of us for 99k In total.

i have just read on the govt website:

If any of you will own, or part own more than one residential property worth £40,000 or more, you will have to pay the higher rates on your new purchase (unless there is another reason why the higher rates do not apply).

does this mean higher rate wouldn’t apply?

thanks for your replies. Sorry about the confusion 

Sounds to me like you own one third of a 150k house, = 50k, = 3% higher rate charged.

SDLT_Geek

Today’s value has everything to do with it!  With you still having a one third share worth £50k, the extra 3% SDLT would be due on the £400,000 purchase.  So £12,000 SDLT.  

If your siblings buy out your one third share then I would expect the “chargeable consideration” to be about £50,000.  If so, your siblings would pay SDLT of £1,500.

ARH_2

So the OP should sell 10k worth of equity in the current property to their siblings, in order to bring their interest in it under the 40k threshold?

AdrianC

What is today's value of the property? That is the relevant figure. If it's £120k or more, then your third is £40k+, so you pay +3%.

CGT is based on the difference between the value of your share at the time of disposal, and the time of acquisition.
If the property is now worth £150k, then your third has gained (1/3 x £150k) - (1/3 x £99k) = £50k - £33k = £17k in value.
Your annual CGT allowance is £12,300, so you would pay CGT on £17k-£12.3k = £4,700 at 28% = £1,316.
It may be more, because your CGT allowance covers ALL your capital gains in that tax year.

Myfirsthouse

SpiderLegs said:

Myfirsthouse said:

My share is £33k. I guess today’s value has nothing to do with it as it was bought by 3 of us for 99k In total.

i have just read on the govt website:

If any of you will own, or part own more than one residential property worth £40,000 or more, you will have to pay the higher rates on your new purchase (unless there is another reason why the higher rates do not apply).

does this mean higher rate wouldn’t apply?

thanks for your replies. Sorry about the confusion 

Sounds to me like you own one third of a 150k house, = 50k, = 3% higher rate charged.

But surely it’s not worth £150k until money has exchanged hands. That’s just an estimate