Is my understanding of Stamp Duty correct?

sanques

The situation:

• House A a house owned outright by myself only and currently exchanged to sell
• House B a small apartment my Wife wants to buy outright with her own cash to eventually start a rental business
• House C a new build house that I will buy with a mortgage
  

The questions:

If my Wife was to buy House B for cash and solely in her name will she be classed as a first time buyer and avoid Stamp Duty, as our current House A has only ever been in my name?  We would live in House B for a few months until House C is built and ready for us. If I then purchased House C with a mortgage but solely in my name would I only pay the standard Stamp Duty rate and not the higher one, as I would only have my name on this house and not House B?

Hopefully that is clear and thank you in advance for any help

[Deleted User]

sanques said:

The situation:

• House A a house owned outright by myself only and currently exchanged to sell
• House B a small apartment my Wife wants to buy outright with her own cash to eventually start a rental business
• House C a new build house that I will buy with a mortgage
  

The questions:

If my Wife was to buy House B for cash and solely in her name will she be classed as a first time buyer and avoid Stamp Duty, as our current House A has only ever been in my name?  We would live in House B for a few months until House C is built and ready for us. If I then purchased House C with a mortgage but solely in my name would I only pay the standard Stamp Duty rate and not the higher one, as I would only have my name on this house and not House B?

Hopefully that is clear and thank you in advance for any help

If property B is worth £40k or more the higher rate of SDLT will apply to the purchase of property C.

Your wife will need to wait for the sale of property A to complete before completing the purchase of B or the higher rate will apply to that purchase too.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

seradane

Married couples are treated as a single person for stamp duty calculations. So it doesn't matter who's name is on what property. As far as tax is concerned you both own each of the properties and stamp duty would be calculated as if both of you were buying and selling each of these properties.

[Deleted User]

seradane said:

Married couples are treated as a single person for stamp duty calculations. So it doesn't matter who's name is on what property. As far as tax is concerned you both own each of the properties and stamp duty would be calculated as if both of you were buying and selling each of these properties.

The wife could still be eligible for the FTB SDLT Relief if she meets the criteria:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759714/Stamp_Duty_Land_Tax_relief_for_first_time_buyers_-_guidance_note.pdf

sanques

Thank you both very much. Looks like I had misunderstood then, as I had not realised we would be counted as a single person. We will now review our plans

sanques

Lover_of_Lycra said:

seradane said:

Married couples are treated as a single person for stamp duty calculations. So it doesn't matter who's name is on what property. As far as tax is concerned you both own each of the properties and stamp duty would be calculated as if both of you were buying and selling each of these properties.

The wife could still be eligible for the FTB SDLT Relief if she meets the criteria:

Just saw this reply as I was adding mine above. I will have a read of this thank you

SDLT_Geek

I would not expect OP's wife to qualify for first time buyer's relief on House B (even if House A is first sold) because she only intends to live in it a short time.  The "degree of permanence and expectation of continuity" are missing for House B to be her "residence".

The good news though is that, the above being the case, the 3% surcharge should not apply to OP's purchase of House C.  It would seem that all of the five conditions for the "replacement exception" to apply will be met.  They are set out in SDLTM09800.

I normally object to the simplification that a married couple are treated as a "single unit", but this oversimplification is not leading us astray so far in this discussion.

AdrianC

sanques said:

The situation:

• House A a house owned outright by myself only and currently exchanged to sell
• House B a small apartment my Wife wants to buy outright with her own cash to eventually start a rental business
• House C a new build house that I will buy with a mortgage
  

The questions:

If my Wife was to buy House B for cash and solely in her name will she be classed as a first time buyer and avoid Stamp Duty, as our current House A has only ever been in my name?  We would live in House B for a few months until House C is built and ready for us. If I then purchased House C with a mortgage but solely in my name would I only pay the standard Stamp Duty rate and not the higher one, as I would only have my name on this house and not House B?

Hopefully that is clear and thank you in advance for any help

As has been said, you can't play the "No, it's not mine, it's my spouse's, honest" game within a marriage...

I'm presuming that B will be considerably less expensive than C? And that your primary residence will be changing from A to C?

The way to minimise the cost would be to buy C before B. Then you pay the +3% on B, not on C.

Even if you buy C before the sale of A completes, so have to pay the +3%, you can reclaim that on sale of A.

Mortgages are irrelevant.

[Deleted User]

SDLT_Geek said:

I would not expect OP's wife to qualify for first time buyer's relief on House B (even if House A is first sold) because she only intends to live in it a short time.  The "degree of permanence and expectation of continuity" are missing for House B to be her "residence".

The good news though is that, the above being the case, the 3% surcharge should not apply to OP's purchase of House C.  It would seem that all of the five conditions for the "replacement exception" to apply will be met.  They are set out in SDLTM09800.

I normally object to the simplification that a married couple are treated as a "single unit", but this oversimplification is not leading us astray so far in this discussion.

Good point @SDLT_Geek

SDLT_Geek

It is just possible, depending on the order of transactions, that the 3% surcharge would not apply to either the purchase of House B or of House C.  See Example 7 here: https://www.blakemorgan.co.uk/wp-content/uploads/Downloads/SDLT-case-studies-for-3-surcharge-20.01.20.pdf 

It depends on:

1. House B being the only property the couple have an interest in on the day that is completed and not intending to live in it as their only or main "residence".
2. House C being bought on a later date.

Careful advice would be needed though.

This assumes the properties are in England, this feature of the rules is blocked for purchases in Wales.  Everyone has assumed so far that the properties are in England, is that right?

sanques

SDLT_Geek said:

Everyone has assumed so far that the properties are in England, is that right?

Yes, all in England and thank you (and everyone) for the detailed responses