Help! Parents bought flat in my name outside UK and now I can't afford stamp duty.

abovesealevel

Hi everyone,

A few years ago, my parents purchased a flat in a European country (value around 35,000 Euros) and I don't remember why, but they set this up in my name and I signed something to allow them to do that. I have never been to this property, I have never paid anything for it, nor am I or have I received any money for it. 

I am now in the position of buying my first real property in UK and I just realized that I might not be considered a first time buyer. 

I tried to find some information online and saw something about a £40,000 threshold for the higher SDLT threshold, but for me this is unclear what this is referring to. 

I also read something about proving no beneficial ownership, but I am not sure if this applies here. 

I am freaking out a little and can't believe this will jeopardise my first time buyer SDLT or maybe even mortgage chances. Can someone help/give advice? Thank you! 

user1977

You're not a first time buyer (for SDLT purposes) if you've ever owned property anywhere in the world.

Is 35,000 Euros the current value of the property? Are you still in touch with your parents? Can't they explain why you're the owner of this property? Are you the beneficial owner of it (in English law terms)?

abovesealevel

user1977 said:

You're not a first time buyer (for SDLT purposes) if you've ever owned property anywhere in the world.

Is 35,000 Euros the current value of the property? Are you still in touch with your parents? Can't they explain why you're the owner of this property? Are you the beneficial owner of it (in English law terms)?

I need to ask them for a current valuation, but I suspect it’s still worth around the 35k euro mark. 

I am not sure what the “beneficial owner” of it means — I have for sure never benefited from it. Is there a way to prove that?

They probably used my name for tax benefits as a FTB in that country and I was young and stupid and let them. 

secla

sell "your" flat. 

Although if you get on well with your parents that may not go down well

Snookie12cat

If you do not sell that flat or put in in your parents name you will need to pay the extra stamp duty of 3or4%. 
It's very unlikely you will get FTB status now though so will not get your stamp duty exemption.

Flugelhorn

ask your parents to give you the stamp duty now as they benefited from the flat being in your name previously 

saajan_12

Snookie12cat said:

If you do not sell that flat or put in in your parents name you will need to pay the extra stamp duty of 3or4%. 
It's very unlikely you will get FTB status now though so will not get your stamp duty exemption.

If the other property value is EUR 35k, thats ~GBP 29k, so under the 40k threshold. As such, it wouldn't get counted when assessing the 3% additional rate to buy another property in England (rules may vary elsewhere). 

So, OP would just pay 'standard' stamp duty. However at any value, OP can't get their FTB status back for the lower stamp duty. 

TBagpuss

Sell the overseas property, pay the stamp duty from the €35,000 and then give the balance to your parents. Or alternatively ask them to let you have money to cover to stamp duty, and then transfer the overseas property into their names. 

Do you know how much your stamp duty will be? 

abovesealevel

Thanks everyone,

The flat is now worth more than the 40k allowance so I've decided to dispose of the flat by gifting it back to my family and paying the Capital Gains Tax on it. This seems to be the much better solution for me as the SDLT would have been way more, and I get absolutely no benefit from owning that flat.

theartfullodger

How kind of your parents to have been so generous: Doubt many viewers will have been so lucky!

Keep_pedalling

theartfullodger said:

How kind of your parents to have been so generous: Doubt many viewers will have been so lucky!

It does not sound like they did it out of kindness, more like avoiding tax of some kind and they actions have had serious consequences for the OP. If that is the case the kind thing to do would be to compensate for the extra tax they ar3 now facing.