Marriage and stamp duty question

Anjinsan1598

Hello!

This is the first time posting here - so please excuse my ignorance with forum etiquette.

I purchased a house in 2012, which today is worth around  £120,000. Since then, I have married and my wife has no formal stake in this house. Additionally, my wife has never owned a property before. This year, we are in the process of buying a house together for £355,000. There is currently no mortgage with the £120,000 house, but we would like to convert it to a BTL mortgage, releasing £80,000 for the purpose of a deposit for the new house. We've also contributed £30,000 of our own savings for the purpose of the deposit, making our whole deposit ~£110,000. As such, if the exchange of the new house was hypothetically this month, what stamp duty would we expect to pay? The reason why I ask is because last month, our solicitors gave us a completion statement with a stamp duty charge of £5250. We've now received a new completion statement with a stamp duty of £18,400

Thank you for taking the time to read the question - Any and all thoughts are very welcome!

[Deleted User]

Anjinsan1598 said:

Hello!

This is the first time posting here - so please excuse my ignorance with forum etiquette.

I purchased a house in 2012, which today is worth around  £120,000. Since then, I have married and my wife has no formal stake in this house. Additionally, my wife has never owned a property before. This year, we are in the process of buying a house together for £355,000. There is currently no mortgage with the £120,000 house, but we would like to convert it to a BTL mortgage, releasing £80,000 for the purpose of a deposit for the new house. We've also contributed £30,000 of our own savings for the purpose of the deposit, making our whole deposit ~£110,000. As such, if the exchange of the new house was hypothetically this month, what stamp duty would we expect to pay? The reason why I ask is because last month, our solicitors gave us a completion statement with a stamp duty charge of £5250. We've now received a new completion statement with a stamp duty of £18,400

Thank you for taking the time to read the question - Any and all thoughts are very welcome!

The higher rate of SDLT will apply because you are purchasing an additional residential property. 

grumiofoundation

The first completion statement they have given you doesn't seem to have taken into account the +3% surcharge.

The new one seem to be assuming you will complete after September 2021.


If you complete between now and September 2021 (no SDLT to pay up to £250,000) you should pay £15,900 - made up of the +3% additional property surcharge (£10,650) and 5% of the value above 250,000 (£5,250).


If you complete after September the SDLT due = £18,400.



I used the government SDLT calculator (see link).

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

Spreadsheetman

Lover_of_Lycra said:

....

The higher rate of SDLT will apply because you are purchasing an additional residential property. 

It is also assuming completion after 30th September when all the subsidies are finished. If before then it would be £15,900.00.

Check out the HMRC calculator: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

If you were selling the first house instead of converting to a BTL you would pay a lot less. (£5,250 on completion up to 30th Sept)

Anjinsan1598

Thank you Spreadsheetman - That's consistent with my thoughts.

AdrianC

You own A.
You are buying B, and not selling A.
Additional property, +3%...

IF it was just you owning A, and just wife buying B, then it would still apply because you're married - you + wife are viewed as a single entity for SDLT purposes.

Sell A within 3yrs, you can reclaim the +3%.