Second home stamp duty due to partial council house ownership

J41721

Hi

20 years back my mum bought a percentage of the council flat we live in and put my name on it.  I enquire that it is a joint tenancy and it is not a saleable flat as we don't own 100%.

Now I am married and want to buy my own property.  My lawyer told me I might have to pay second home stamp duty even the council have partial ownership

Council said I could take my name off given I no longer live there but it will take 8-16 weeks to get approval, then I would have to instruct lawyer to amend the deed.  The transfer would involve no money exchange, (not a sale to my mother).  It would just be administration fee  and lawyer fee.

So we are thinking of moving ahead of purchasing with a bigger mortgage to cover SDLT and ask for a refund later

I wonder if this is feasible as my lawyer isn't familiar.

Thank you

user1977

It sounds like this would fall within the "replacing your main residence" concession, so you'd qualify for the refund after completion of the disposal of your interest.

J41721

Some link I read - https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

If you sell or give away your previous main home within 3 years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.

TheJP

I don't think you can borrow extra on the mortgage for SDLT unless you use some of your deposit.

SDLT_Geek

J41721 said:

Hi

20 years back my mum bought a percentage of the council flat we live in and put my name on it.  I enquire that it is a joint tenancy and it is not a saleable flat as we don't own 100%.

Now I am married and want to buy my own property.  My lawyer told me I might have to pay second home stamp duty even the council have partial ownership

Council said I could take my name off given I no longer live there but it will take 8-16 weeks to get approval, then I would have to instruct lawyer to amend the deed.  The transfer would involve no money exchange, (not a sale to my mother).  It would just be administration fee  and lawyer fee.

So we are thinking of moving ahead of purchasing with a bigger mortgage to cover SDLT and ask for a refund later

I wonder if this is feasible as my lawyer isn't familiar.

Thank you

If the 3% extra SDLT is due on account of you owning a share in your mother's home, then there would be conditions to meet for that 3% to be recoverable afterwards on you parting with that share.  One of the conditions is that you had lived in that property as your only or main residence at some point within the three years leading up to your intended purchase completing.

You say you no longer live there, but do not say how long ago it was that you moved out.

user1977

Ah, I didn't pick up on the contradiction between "we live in" and "I no longer live there".

J41721

SDLT_Geek said:

J41721 said:

Hi

20 years back my mum bought a percentage of the council flat we live in and put my name on it.  I enquire that it is a joint tenancy and it is not a saleable flat as we don't own 100%.

Now I am married and want to buy my own property.  My lawyer told me I might have to pay second home stamp duty even the council have partial ownership

Council said I could take my name off given I no longer live there but it will take 8-16 weeks to get approval, then I would have to instruct lawyer to amend the deed.  The transfer would involve no money exchange, (not a sale to my mother).  It would just be administration fee  and lawyer fee.

So we are thinking of moving ahead of purchasing with a bigger mortgage to cover SDLT and ask for a refund later

I wonder if this is feasible as my lawyer isn't familiar.

Thank you

If the 3% extra SDLT is due on account of you owning a share in your mother's home, then there would be conditions to meet for that 3% to be recoverable afterwards on you parting with that share.  One of the conditions is that you had lived in that property as your only or main residence at some point within the three years leading up to your intended purchase completing.

You say you no longer live there, but do not say how long ago it was that you moved out.

20 years ago I went to University and then started living in dorm then in rental, and went back on weekends and holiday.

I don't think I have any correspondence there in the last three years to demonstrate that is my main home, as stupidly I have thrown it all away

user1977

If you've only been back on weekends and holiday, it ain't your main home. In which case you'll need to complete the disposal of your interest in it first (or at least simultaneously with your purchase), if you want to avoid the additional rate of SDLT.

SDLT_Geek

user1977 said:

If you've only been back on weekends and holiday, it ain't your main home. In which case you'll need to complete the disposal of your interest in it first (or at least simultaneously with your purchase), if you want to avoid the additional rate of SDLT.

This is correct.

J41721

if my share of the council property worth less than 40,000 , do I still need to pay second home stamp duty?

I think we only own 23% , and council 77%.

Annisele

I don't know about the stamp duty question, but I wonder if OP will be liable for capital gains tax here? Giving away (an interest in) a house that you live in as your main residence doesn't attract CGT - but giving away a house you haven't lived in for 20 years does. It may well be that the tax fits within OP's annual allowance, but that will depend on all sorts of things - mainly the size of the gain and OP's other capital gains during the relevant tax year.