Taking name off house - Stamp duty

[Deleted User]

Myfirsthouse said:

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

In cases like this HMRC use the market rate not the discounted/lower price family might choose to sell or even give away property at. 

If you don’t, and have never, lived in this property jointly owned with your siblings then you might have a small CGT bill. 

SDLT_Geek

Myfirsthouse said:

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

Myfirsthouse said:

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

Your estimate.  So a sensible figure to work on for now surely!  
The relevant legislation (about whether you have a share in another property worth £40K or more) calls for a present day market value, not the historic price.

AdrianC

Myfirsthouse said:

SpiderLegs said:

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

Yes, it is an estimate. An estimate by practiced, experienced professionals whose job is estimating the value of properties.

Value estimations for tax purposes are done all the time. In this case, it's necessary whether money changes hands or not.

BTW, your siblings will have a vested interest in maximising the value of the property when it comes to later sale - because that'll reduce their own CGT bills then...

saajan_12

Basically, if you sell your share to siblings, 
- you pay CGT on the increase in market value in your share (eg 33k -> 50k). You'd have some costs and allowances you can deduct from there, so it would likely come very small CGT. (say your share of buying/selling costs was 2k, then your Gain = 50k - 33k - 2k = 15k. Assuming you didn't live there and haven't sold any other investments this tax year, your allowance would be 12.3k. Taxable gain = 15k - 12.3k = £2.7k on which you pay between 18% and 28% tax depending on your income tax band. So effectively £486-756 CGT. 

- Siblings pay SDLT on any consideration paid to you (not market value). The consideration could be cash to you, paying off your mortgage, or forgiving a loan previously made to you. If they pay you 25k each, they would pay 3% = £750 each. 

If you don't sell, then whether you pay the +3% SDLT on your onward purchase depends on whether you hold a £40k share in another property NOW, not when you purchased it. 

The 33k figure is irrelevant except for CGT calcs. 

bpj

If the siblings do not own another property (i.e. are only increasing their share is this property) is the 3% SDLT still due?

ARH_2's suggestion that you sell e.g. half your share to your siblings might be worth considering. Then the CGT due will be more likely to fall into your allowance, and any SDLT due from your siblings will be smaller.

SDLT_Geek

bpj said:

If the siblings do not own another property (i.e. are only increasing their share is this property) is the 3% SDLT still due?

Good point.  If neither of the siblings own another property (nor their spouses or civil partners) then the 3% extra SDLT would not be due on their acquisition of OP's share.