Trying to avoid stamp duty

allways_injured

Hoping for a bit of advice, we are looking at buying a second property with inheritance money but realise stamp duty is 3%, so  was thinking of putting it in my sons name who already has a small mortgage on a bedsit, but said he thinks he would be able to change his mortgage over to a buy to let mortgage and then he wouldnt be eligable to pay stamp duty. Is this correct?. The other question is he lives with his girlfriend who doesn't work or contribute to anything, so if they were to split up and it was in his name would she be able to claim a part of it.

Slithery

allways_injured said:

but said he thinks he would be able to change his mortgage over to a buy to let mortgage and then he wouldnt be eligable to pay stamp duty. Is this correct?.

No, it's not correct.

davidmcn

allways_injured said:

Hoping for a bit of advice, we are looking at buying a second property with inheritance money but realise stamp duty is 3%, so  was thinking of putting it in my sons name who already has a small mortgage on a bedsit, but said he thinks he would be able to change his mortgage over to a buy to let mortgage and then he wouldnt be eligable to pay stamp duty. Is this correct?

No, it's complete nonsense. It's an additional property so the higher rate would apply. Besides, if it's merely "in his name" but you have a beneficial interest, your circumstances would still be relevant.

The other question is he lives with his girlfriend who doesn't work or contribute to anything, so if they were to split up and it was in his name would she be able to claim a part of it.

Almost certainly not assuming those circumstances don't change.

Thrugelmir

allways_injured said:

The other question is he lives with his girlfriend who doesn't work or contribute to anything, so if they were to split up and it was in his name would she be able to claim a part of it.

If she has any sense she'll suggest that they get married. 

For context how much stamp duty will you pay? 

AdrianC

Even if it was solely the son buying it, he already has one property, so this would be additional - +3%.

And, of course, if he bought it, he'd get the income from it... right?

greatcrested

AdrianC said:

And, of course, if he bought it, he'd get the income from it... right?

and be liable for the tax on that income.... right?

Basically the aditional 3% is to discourage 2nd property ownership or generate income from those who are not discouraged.

Since you say:

"we are looking at buying a second property with inheritance money"

you seem to fall squarely into that bracket.

To avoid the 3% SDLT, why nor consider investing in something more liquid, and less stressful and risky?

allways_injured

My son was going to rent his flat and live in the property that we are thinking of buying. He was obviously advised wrongly about swopping his mortgage for buy to rent. We haven't found a property yet but are looking in the £280,000 - £300,000 bracket.

grumiofoundation

allways_injured said:

My son was going to rent his flat and live in the property that we are thinking of buying. He was obviously advised wrongly about swopping his mortgage for buy to rent. We haven't found a property yet but are looking in the £280,000 - £300,000 bracket.

Who advised him?

Does he want to (and can he/you afford to) run a residential letting business?

saajan_12

allways_injured said:

My son was going to rent his flat and live in the property that we are thinking of buying. He was obviously advised wrongly about swopping his mortgage for buy to rent. We haven't found a property yet but are looking in the £280,000 - £300,000 bracket.

No, how would that be any different to you buying an additional property?
* The mortgage type is irrelevant to SDLT
* Who will live there is irrelevant to SDLT usually (only relevant when you're also selling, which isn't the case here) 

allways_injured

Someone in a property letting agency told him if he were to let his flat with a buy to let mortgage he could then buy the house and not be subject to stamp duty. It seems that is not the case so I think we will just have to invest it in bonds or something.
Thanks for all your advise everyone.

grumiofoundation

allways_injured said:

Someone in a property letting agency told him if he were to let his flat with a buy to let mortgage he could then buy the house and not be subject to stamp duty. 

I would suggest if you/your son ever do go into residential lettings to use a different letting agent....

 It seems that is not the case so I think we will just have to invest it in bonds or something.

Bonds can mean different things from savings accounts/premium bonds (capital not at risk) to investment bonds of varying risk levels -> government, corporate
then all the way up to mini-bond scams (cf. London capital and finance).

https://forums.moneysavingexpert.com/categories/savings-investments