Should I have paid stamp duty when buying my ex-husband out of our home?

purplesocks_2

Hi all,

I'm a first time poster, so please bear with me.

I purchased a house with my now ex-husband in 2017. We divorced in 2019 and I have recently had a judge rule that I can keep the house if I paid him £7,500, which I did.

My solicitor then told me that I needed to pay stamp duty on the half of the house I was buying from my ex. When I bought his half of the house, I had to get a friend to go on the mortgage with me or I couldn't have afforded it. My friend is a first time buyer. The completion date was 24/04/2020.

The house is freehold, residential and there is no other property that either me, my friend or my ex, have ever owned. So when asked on the gov stamp duty calculator, 'Have you ever owned or part owned another property?' my answer was 'no'. However my solicitor decided that the answer should be 'yes' and I have therefore ended up paying £939 in stamp duty.

When I checked with HMRC, they confirmed (only verbally) that it was clear there would be no stamp duty to pay on this transaction as my name does not appear against any other property on the Land Registry.

Is anyone able to tell me if I in fact paid the £939 stamp duty without needing to, and if so, am I able to get a refund, and how?

Very many thanks, purplesocks

davilown

I may be wrong but you already owned the house - I’m also pretty sure it’s exempt due to court order (financial settlement) but there will be someone with a lot more expertise along soon

SDLT_Geek

The purchase completed on 24 April 2020, so this was before the present SDLT holiday.  So the rules applicable at the time would mean:
(a)  If first time buyers' relief applied the first £500,000 of the "chargeable consideration" was free of SDLT.
(b)  Absent first time buyers' relief, only the first £125,000 is free of SDLT.
In your case it seems:
1.  The special exemption for divorce could not apply because a friend took a share in the property with you.
2.  First time buyers' relief could not apply, because you had already acquired a share in a property (even though the same one).  The question on the HMRC calculator is slightly misleading here.
3.  The 3% surcharge would not apply, because neither you nor your friend have another property.
It seems there might have been a confusion, when OP checked with HMRC, between the rules for first time buyers' relief and the rules for the 3% surcharge.  In the case of the 3% surcharge, so long as only the one property is owned, it does not matter that a share in the property was already owned.  But that prior share rules out first time buyers' relief.
SDLT is calculated on the "chargeable consideration".  In OP's case, this is likely to be the total of £7,500 and half of the mortgage debt.

jackieblack

What you had was not a house purchase (you already owned the house) but a transfer of equity.
No stamp duty due.
Your solicitor was wrong and you should make a complaint. IMO the solicitors should refund you (and it’s their problem whether they can get the money back from HMRC) as it was their error.

GDB2222

I don’t know what the answer is, because your circumstances are very unusual, but you have had answers from three sources:

Your solicitor
@SDLT_Geek. Who I think is a solicitor specialising in this area
Various well meaning amateurs on MSE


The two solicitors agree with each other, whilst the amateurs take a different approach. I would tend to go with the experts, but it’s not my £900 at stake.

I think it’s reasonable to query this with your solicitor, but I would expect a response that he checked it carefully at the time, and unfortunately you were correctly charged. To challenge that response you would really need to pay another solicitor, and I suspect that you would be wasting your money.

saajan_12

jackieblack said:

What you had was not a house purchase (you already owned the house) but a transfer of equity.
No stamp duty due.
Your solicitor was wrong and you should make a complaint. IMO the solicitors should refund you (and it’s their problem whether they can get the money back from HMRC) as it was their error.

What is the distinction you're making between a house purchase and transfer of equity? How is a normal arms length house purchase not just a transfer of (100%) equity. Note 
* married couples are explicitly exempt of paying stamp duty on transfers between them - this doesn't necessarily apply to OP, but this exemption indicates that there is a scenario of paying on transfers between non couples. 
* shared ownership properties has a framework for paying stamp duty in different stages as you staircase up - again indicating there is a scenario where a "transfer of equity" to increase your share does invoke stamp duty. 

Also even if the solicitor was wrong, the OP never thought they were paying the sols, they knew the money was for HMRC. So the solicitors wouldn't 'refund' and certainly wouldn't get the money back from HMRC. If the sols were wrong, a client may be able to seek some compensation but the legal position is not how you indicate. 

Scotbot

I don't know  enough about SDLT to answer your question, an expert on here is saying yes and you say HMRC said no. As it is complex the person at HMRC may have misunderstood what you said or you may unknowingly  have given them the wrong information or incomplete information. It will cost you nothing other than time to call HMRC explain the situation again and if they still say no SDLT was due ask how to claim it back. I assume you would have to write to them. Trying to do this via the solicitor will cost you.

davidmcn

jackieblack said:

IMO the solicitors should refund you (and it’s their problem whether they can get the money back from HMRC) as it was their error.

The solicitors can't personally get the money back from HMRC, any claim for amendment/refund needs to be made by (or on behalf of) the taxpayer. The solicitors should however indemnify their client from any ultimate loss (if it was in fact an error by them).

macman

Why is this only being raised now, 9m after completion, if you queried it with your conveyancer at the time, when you saw and presumably approved the completion statement?

sheramber

When I checked with HMRC, they confirmed (only verbally) that it was clear there would be no stamp duty to pay on this transaction as my name does not appear against any other property on the Land Registry.

the stamp duty payable is nothing to do with having owned a previous home. HMRC have answered what you asked  about the second home charge but you have not been charged that. You have been charged the standard stamp duty which applied  in April 2020.
That charge was amended  temporarily in July 2020. 

getmore4less

jackieblack said:

What you had was not a house purchase (you already owned the house) but a transfer of equity.
No stamp duty due.
Your solicitor was wrong and you should make a complaint. IMO the solicitors should refund you (and it’s their problem whether they can get the money back from HMRC) as it was their error.

From what the OP said that is not what happened from 

"I had to get a friend to go on the mortgage with me" 

AIUI That would trigger a SDLT assessment that is not fully exempt due to the combination of purchasers.