Stamp duty question / second property ?

SR24

My mum passed earlier this year, my Dad is main beneficiary in the will. They both have a clause in their will to show that their half of the property is then held by the three executors/trustees, my Dad, brother and myself. Land registry papers are being drawn up to this effect.
I am in the process of looking for my own property following divorce, living with family until then.
does the land registry paperwork re the above mean that when I buy a property that I have to pay extra stamp duty?

canaldumidi

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09795

SDLT_Geek

SR24 said:

My mum passed earlier this year, my Dad is main beneficiary in the will. They both have a clause in their will to show that their half of the property is then held by the three executors/trustees, my Dad, brother and myself. Land registry papers are being drawn up to this effect.
I am in the process of looking for my own property following divorce, living with family until then.
does the land registry paperwork re the above mean that when I buy a property that I have to pay extra stamp duty?

The link canaldumidi sent is helpful, assuming the property you will buy is in England.  The link shows that even if, by the date you complete the purchase of a property, you have acquired a share in your parents' property, it will not "count against" you for the purposes of the 3% surcharge to stamp duty land tax for three years.  Here are some points:

(a)  This assumes that your share is not over 50%.
(b)  The three year clock only starts when you acquire an interest in the property.  That is typically when there is an "assent" or an "appropriation".
(c)  The rules are different if you would otherwise be a first time buyer for SDLT.  There is no three year rule there to help you.

SR24

Thank you both so much for your advice @canaldumidi and @SDLT_Geek

@SDLT_Geek
Yes it is in England and my share is less than 50%. 
By Assent.

My future property purchase is not as FTB

Hopefully I will have bought my new property within 3 years, but with the current property market who can tell 🙄!

So after the three years from date of assent, any future property purchases myself or my brother might make would result in higher SDLT?

SDLT_Geek

SR24 said:

Thank you both so much for your advice @canaldumidi and @SDLT_Geek

@SDLT_Geek
Yes it is in England and my share is less than 50%. 
By Assent.

My future property purchase is not as FTB

Hopefully I will have bought my new property within 3 years, but with the current property market who can tell 🙄!

So after the three years from date of assent, any future property purchases myself or my brother might make would result in higher SDLT?

Perhaps, but there is an exception if you are "replacing" your only or main residence.  There are a number of conditions to be met to count as "replacing" a residence; one of which is that a previous main residence has been sold (or otherwise disposed of). 
So generally, a person selling their former home and buying a new one, does not pay the extra 3% SDLT even though they own another property.

SR24

@SDLT_Geek

Thank you, so if I don’t buy my ‘new’ property within the 3years after assent I will be due to pay higher rate SDLT.

If I do buy it within 3 years then I won’t pay higher rate SDLT on that transaction, and then if/when in future (3years plus) I sell my ‘new’ property/home and buy a new property/home than that is classed as replacing my main residence and higher rate SDLT won’t apply.

Have I understood this correctly please?

SDLT_Geek

SR24 said:

@SDLT_Geek

Thank you, so if I don’t buy my ‘new’ property within the 3years after assent I will be due to pay higher rate SDLT.

If I do buy it within 3 years then I won’t pay higher rate SDLT on that transaction, and then if/when in future (3years plus) I sell my ‘new’ property/home and buy a new property/home than that is classed as replacing my main residence and higher rate SDLT won’t apply.

Have I understood this correctly please?

Yes, that is correct, on the rules as they stand now.

SR24

Thank you @SDLT_Geek

appreciate your time sharing your knowledge 

SR24

@SDLT_Geek @canaldumidi

Hi, I am buying my property (alt last!) and have advised my conveyancing solicitor that I do not believe I need to pay the higher tax rate based on the link provided in this thread and the subsequent posts.

The sols have emailed me to say they do not give tax advice and they are at liberty to pay what I instruct them to pay to HMRC. 
They attached a document they have at their office and highlighted a few points and asked me how I wish to proceed.

The points they make are :-
1) Anyone who buys an additional residential property for more than £40k (which of course I am) and already has a share in another property of £40k or more (I estimate my share in the inherited property, a third of 50%, is currently worth £50k)
2) If I was replacing my main residence the 3% surcharge would not apply. I sold my main residence in 2020 as part of divorce and am living with family since. They have highlighted that my situation is not replacing my main residence as I am no longer an owner or co-owner of that property as it has been sold.

I feel that even though the above two points are facts in my situation, that my understanding from your posts and the link from HMRC in particular this section below - negates my obligation to pay 3% higher

Where a person becomes entitled to such an interest in the three years before a chargeable transaction, the interest can be ignored for the purposes of determining whether the transaction is a higher rates transaction [Para 16(2)] provided that:

• the beneficiary became a joint owner of the interest by inheritance [Para 16(1)],
• the beneficiary and any spouse or civil partner’s combined interest has not exceeded half of the major interest in the three years before the effective date of the chargeable transaction [Para 16(4)].

Please can you confirm if this is the case. Thanking you in advance.

SDLT_Geek

SR24 said:

@SDLT_Geek @canaldumidi

Hi, I am buying my property (alt last!) and have advised my conveyancing solicitor that I do not believe I need to pay the higher tax rate based on the link provided in this thread and the subsequent posts.

The sols have emailed me to say they do not give tax advice and they are at liberty to pay what I instruct them to pay to HMRC. 
They attached a document they have at their office and highlighted a few points and asked me how I wish to proceed.

The points they make are :-
1) Anyone who buys an additional residential property for more than £40k (which of course I am) and already has a share in another property of £40k or more (I estimate my share in the inherited property is currently worth £50k)
2) If I was replacing my main residence the 3% surcharge would not apply. I sold my main residence in 2020 as part of divorce and am living with family since. They have highlighted that my situation is not replacing my main residence as I am no longer an owner or co-owner of that property as it has been sold.

I feel that even though the above two points are facts in my situation, that my understanding from your posts and the link from HMRC in particular this section below - negates my obligation to pay 3% higher

Where a person becomes entitled to such an interest in the three years before a chargeable transaction, the interest can be ignored for the purposes of determining whether the transaction is a higher rates transaction [Para 16(2)] provided that:

• the beneficiary became a joint owner of the interest by inheritance [Para 16(1)],
• the beneficiary and any spouse or civil partner’s combined interest has not exceeded half of the major interest in the three years before the effective date of the chargeable transaction [Para 16(4)].

Please can you confirm if this is the case. Thanking you in advance.

Yes, confirmed.  The three year grace period for inheriting a share not exceeding 50% seems to apply to you, as previously thought.

If that did not help you for some reason, then the "replacement of main residence rules" might still help you, I do not agree with the bit in bold above.  There is three year period from selling an old home within which to buy a new home.

SR24

@SDLT_Geek

Thank you, it is really helpful to have a second set of eyes and more experience in these matters.

I will go back to my solicitor and advice the inheritance less than 50% is my main reason for exemption in this case as per the original excerpt from HMRC manual.

I will also quote the following, as I agree with you there is the three year rule of selling and buying main residence - covered I believe by  https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800 

SDLTM09800 - SDLT - higher rates for additional dwellings: Condition D - general - Para 3(6) Sch 4ZA FA2003 

Thank you for your time again, this is greatly appreciated