Tax for renew lease

AdrianC

So the £7k went to the previous freeholder, to buy the freehold.

Once the new freeholder was formed, it granted all leaseholders a 999yr peppercorn lease for free?

jimmylau8080

AdrianC said:

So the £7k went to the previous freeholder, to buy the freehold.

Once the new freeholder was formed, it granted all leaseholders a 999yr peppercorn lease for free?

Yup. simple as that. And we will became the new freehold (share of freehold)

jimmylau8080

**Actually, we only grant those who brought the freehold 999yr peppercorn lease for free (I am of them)

greatcrested

jimmylau8080 said:

Isn't true that I need to pay this as a dividend tax above. I was very confused because I already paid £7,000 to extend my current flat lease. Why do I need to pay this as tax (That flat is my private resident since 2013)?

Well we've now established that you did not pay £7000 to extend your current lease.

You paid £7000 to buy a share of the freehold.

jimmylau8080

greatcrested said:

jimmylau8080 said:

Isn't true that I need to pay this as a dividend tax above. I was very confused because I already paid £7,000 to extend my current flat lease. Why do I need to pay this as tax (That flat is my private resident since 2013)?

Well we've now established that you did not pay £7000 to extend your current lease.

You paid £7000 to buy a share of the freehold.

oic.
So, I need to pay the tax because I buy a share of the freehold?

Sallysharp

Hello all, we have a studio flat that we are all ready to re-mortgage on - its been valued at £125,000 with  64 years remaining - we are using the funds surplus to pay for a lease extension but now am wondering if we should hold off a bit longer as I read that the Government are changing the rules....? our costs are £10,000 for lease extension - this is just for another 99 years on top with no increase in ground rent ( currently £50 a year )  plus £1,000 their solicitors costs and £1,000 our solicitor costs - we are unsure if this is a good deal or we should wait ... we haven't paid anything out as yet  although we are being asked to pay upfront freeholders costs asap - we do not intend to sell as it will be our pension later on in life 
- any advice greatly aprreciated  thanks

AdrianC

Sallysharp said:

Hello all, we have a studio flat that we are all ready to re-mortgage on - its been valued at £125,000 with  64 years remaining - we are using the funds surplus to pay for a lease extension but now am wondering if we should hold off a bit longer as I read that the Government are changing the rules....?

Nobody knows.
They've said they want to.
They haven't published any draft legislation, so nobody knows what it would contain if and when they do.
Draft legislation goes through both houses, and gets amended.
It may or may not ever make it to law before the next election, or before the next change of PM/ministers, whichever's sooner.

A 64yr lease is unmortgageable, and the marriage value is only going one way in the interim.

saajan_12

jimmylau8080 said:

greatcrested said:

jimmylau8080 said:

Isn't true that I need to pay this as a dividend tax above. I was very confused because I already paid £7,000 to extend my current flat lease. Why do I need to pay this as tax (That flat is my private resident since 2013)?

Well we've now established that you did not pay £7000 to extend your current lease.

You paid £7000 to buy a share of the freehold.

oic.
So, I need to pay the tax because I buy a share of the freehold?

They're separate things.
* You paid £7k to the pension co to buy 1/26 of the freehold. No tax payable. 
* The freehold company gave you as leaseholder an extension for free. As you did NOT pay separately for this, that's effectively a distribution of £X value. That is what you're paying tax on, the question is what's X

Arguably, a 999 year lease is pretty close to 1/26 of the freehold, and we know what that's worth..£7k. You pay dividend tax on that £X value you got. 

jimmylau8080

saajan_12 said:
They're separate things.

* You paid £7k to the pension co to buy 1/26 of the freehold. No tax payable. 
* The freehold company gave you as leaseholder an extension for free. As you did NOT pay separately for this, that's effectively a distribution of £X value. That is what you're paying tax on, the question is what's X

Arguably, a 999 year lease is pretty close to 1/26 of the freehold, and we know what that's worth..£7k. You pay dividend tax on that £X value you got. 

LOL. If I don't buy the buy 1/26 of the freehold. I doubt the freehold company gave you as leaseholder an extension for free.

Does it mean everyone who has the lease extension needs to pay that tax?

By the way, can I deduct the solicitor fees and etc as expenses that I used to get the freehold company gives me an extension for free?