Stamp duty do we pay it ??

magicman62

Hi ,my daughter is buying her house at the moment  and she is trying to answer a question whether she is liable for stamp duty. It couls be complicated  as 7 years ago when myself and my wife , her mother divorced, My wife wanted to relinquish her entitlement to the house and any future interest and transfer her share into the names of the 2 children, this was to ensure it was kept in the family,until such time that it was either sold or I died. To accomplish this legally it had to be written into the divorce settlement and we had to 25% although I am responsible financially for all bills and the upkeep ect as stated under the declaration  the solictor drew up as part off the settlement for the divorce. However when filling in the house purchase papers my daughter wasnt sure about the stamp duty regulations , it asked if she had any interest in any other property in the uk, technically she is on the land registory deeds with a 25% share of the proceeds should I die or sell the house , but she is still a first time buyer as she does not own a property , can anyone answer this please ...many thanks

Slithery

That all depends on exactly how the divorce settlement was worded.
@SDLT_Geek is probably the best person to answer this.

SDLT_Geek

magicman62 said:

Hi ,my daughter is buying her house at the moment  and she is trying to answer a question whether she is liable for stamp duty. It couls be complicated  as 7 years ago when myself and my wife , her mother divorced, My wife wanted to relinquish her entitlement to the house and any future interest and transfer her share into the names of the 2 children, this was to ensure it was kept in the family,until such time that it was either sold or I died. To accomplish this legally it had to be written into the divorce settlement and we had to 25% although I am responsible financially for all bills and the upkeep ect as stated under the declaration  the solictor drew up as part off the settlement for the divorce. However when filling in the house purchase papers my daughter wasnt sure about the stamp duty regulations , it asked if she had any interest in any other property in the uk, technically she is on the land registory deeds with a 25% share of the proceeds should I die or sell the house , but she is still a first time buyer as she does not own a property , can anyone answer this please ...many thanks

The ownership might well be that the property is held as “tenants in common” with the daughters each having a 25% share.  If so then not only have they lost first time buyers’ relief, but the extra 3% SDLT will be due (assuming the shares are worth £40,000 or more).

The position would not be so bad if under the terms of a trust you have a right to live in the property for life.

One for legal advice, after a careful review of the terms of the documents.

Slithery

Just to add, you need legal advice from someone who specialises in SDLT law not just your standard conveyancer as it's a complicated matter that they may not have ever dealt with before.

SDLT_Geek said:
If so then not only have they lost first time buyers’ relief, but the extra 3% SDLT will be due (assuming the shares are worth £40,000 or more).

CGT liability may also be an issue for her in the future.

magicman62

The position would not be so bad if under the terms of a trust you have a right to live in the property for life

Under the term of the agreement  I am allowed to live in the house until my demise, no one has any financial claim to the property until then...it is written in the declaration as agreed by the court that my ex wife gets 30% and the children get 35% each and should any die their share passes to the survives..so ot looks as if my daughter will be subject to stamp duty. .maybe be simpler to pay than waste time arguing as the vender wants it sorted , or he may pull out   

Slithery

It's nothing to do with the vendor, it's only HMRC that you would be responsible for paying.

SDLT_Geek

magicman62 said:

The position would not be so bad if under the terms of a trust you have a right to live in the property for life

Under the term of the agreement  I am allowed to live in the house until my demise, no one has any financial claim to the property until then...it is written in the declaration as agreed by the court that my ex wife gets 30% and the children get 35% each and should any die their share passes to the survives..so ot looks as if my daughter will be subject to stamp duty. .maybe be simpler to pay than waste time arguing as the vender wants it sorted , or he may pull out   

It would be worth having a specialist look at the declaration carefully to see what type of trust it creates.  Your brief summary does not answer that question. 

Your latest summary is rather different from the first post!  Your ex wife gets 30% rather than nothing, your daughters get 35% each, not 25%?

TheJP

I really don't understand why parents think this old trick is a benefit for their children. This  'keep the house in the family' trick just hinders people with parents thinking they've saved on IHT. Depending on the cost of the house your daughter is named on and the house she is wanting to buy and what savings she has may mean she doesn't have enough money to proceed due to SDLT.