Land Transaction Tax - Do I need to pay it?

Nate_J

SDLT_Geek said:

Nate_J said:

SDLT_Geek said:

Nate_J said:

SDLT_Geek said:

Nate_J said:

Hi,

I've had a search not only around these forums but the obvious Google search brought up some answers, of which some are pretty vague and not specific to my case so hence why I'm asking my query here.

Myself along with two other siblings inherited equal shares in a property. I have now bought their shares out of the property to be the sole owner to use as my main residence. My question is, does the Land Transaction Tax get calculated on the two shares that I've bought out, or the full property value (including my share)?

The reason for the query is because I've received a rather unexpected invoice from the solicitor regarding paying the land transaction tax, however they did not once mention that we'd need to pay it, but I recall numerous conversations from the beginning when we instructed them stating that the transfer was under the threshold (now £180,000) so we wouldn't need to pay it. I don't have this in writing at the moment unfortunately so I'm just trying to gather the correct info so I can go back to them pre-loaded.

I've found it difficult to find the answer on the Land Transaction Tax (Wales) whereas the SDLT for England is far easier to check with the online manual. If my case was in England, thereby falling under the Stamp Duty Land Tax (SDLT) then I would not need to pay, as the transaction would be under the current threshold.

Thanks,

The answer will depend partly on whether you (or any spouse / civil partner) own any other property.
  
It would be helpful to know what LTT has been requested.  Is it 4% of the price you paid for the two shares?

Apologies, I did forget to mention that in the initial post. I am a first time buyer and have never previously owned a property and/or land, I had been renting prior to this.

The LTT that has been requested is based on the full property purchase amount (£250,000), that being £70k over the £180k LTT threshold. The LTT has been calculated on 3.5% of the £70k, that being £2,450.

That is clearer, thank you.  The answer will depend on how the purchase has been structured.

If what has happened is that you have purchased the property from the executors for £250,000, then I would expect the LTT to be worked out on £250,000.  That is even though part of that £250,000 will come back to you as a beneficiary.

If what has happened is that you have bought out shares from siblings (for say £166,667) then the LTT should be assessed on that sum, which would be zero.

The property was not transferred into the beneficiaries names prior to the sale and that was partially due to trying to retrieve the help to buy isa bonus (which in itself is another story which I created a post on), but I essentially applied my full beneficial share (33.33%) of the house and purchased the other shares (66.66%) from my siblings.

But I'm still unsure where I stand with the LTT, and where in writing will this be confirmed.

If your one third share was not first transferred to you first, it sounds as if you bought the whole of the property from the executors for £250,000.  Is that what the documents say?

The documents refer to both the property price being £250k and also the two thirds (£166.66k), but sounds as though our solicitor has put it through as the full value,

I managed to get through to the helpline that deals with the LTT and they had verbally confirmed that the LTT should be zero in our scenario, however I am awaiting an email to confirm this further. Not sure why our solicitor had a different stance on this and also did not think to mention it to us, but judging from the way the purchase has been handled all the way through the process, I'm not really that surprised!

GDB2222

Nate_J said:

SDLT_Geek said:

Nate_J said:

SDLT_Geek said:

Nate_J said:

SDLT_Geek said:

Nate_J said:

Hi,

I've had a search not only around these forums but the obvious Google search brought up some answers, of which some are pretty vague and not specific to my case so hence why I'm asking my query here.

Myself along with two other siblings inherited equal shares in a property. I have now bought their shares out of the property to be the sole owner to use as my main residence. My question is, does the Land Transaction Tax get calculated on the two shares that I've bought out, or the full property value (including my share)?

The reason for the query is because I've received a rather unexpected invoice from the solicitor regarding paying the land transaction tax, however they did not once mention that we'd need to pay it, but I recall numerous conversations from the beginning when we instructed them stating that the transfer was under the threshold (now £180,000) so we wouldn't need to pay it. I don't have this in writing at the moment unfortunately so I'm just trying to gather the correct info so I can go back to them pre-loaded.

I've found it difficult to find the answer on the Land Transaction Tax (Wales) whereas the SDLT for England is far easier to check with the online manual. If my case was in England, thereby falling under the Stamp Duty Land Tax (SDLT) then I would not need to pay, as the transaction would be under the current threshold.

Thanks,

The answer will depend partly on whether you (or any spouse / civil partner) own any other property.
  
It would be helpful to know what LTT has been requested.  Is it 4% of the price you paid for the two shares?

Apologies, I did forget to mention that in the initial post. I am a first time buyer and have never previously owned a property and/or land, I had been renting prior to this.

The LTT that has been requested is based on the full property purchase amount (£250,000), that being £70k over the £180k LTT threshold. The LTT has been calculated on 3.5% of the £70k, that being £2,450.

That is clearer, thank you.  The answer will depend on how the purchase has been structured.

If what has happened is that you have purchased the property from the executors for £250,000, then I would expect the LTT to be worked out on £250,000.  That is even though part of that £250,000 will come back to you as a beneficiary.

If what has happened is that you have bought out shares from siblings (for say £166,667) then the LTT should be assessed on that sum, which would be zero.

The property was not transferred into the beneficiaries names prior to the sale and that was partially due to trying to retrieve the help to buy isa bonus (which in itself is another story which I created a post on), but I essentially applied my full beneficial share (33.33%) of the house and purchased the other shares (66.66%) from my siblings.

But I'm still unsure where I stand with the LTT, and where in writing will this be confirmed.

If your one third share was not first transferred to you first, it sounds as if you bought the whole of the property from the executors for £250,000.  Is that what the documents say?

The documents refer to both the property price being £250k and also the two thirds (£166.66k), but sounds as though our solicitor has put it through as the full value,

I managed to get through to the helpline that deals with the LTT and they had verbally confirmed that the LTT should be zero in our scenario, however I am awaiting an email to confirm this further. Not sure why our solicitor had a different stance on this and also did not think to mention it to us, but judging from the way the purchase has been handled all the way through the process, I'm not really that surprised!

You may have a reasonable cause for complaint.

Nate_J

By a way of an update on this, since it may help other people in a similar position. The WRA confirmed to my solicitor that the 'consideration' that exchanged in my transaction was based on the two thirds that I was buying out and not the full property value (which includes my own share). This therefore brought the consideration under the LTT bracket, meaning we pay no LTT.

I'm of course happy that this is the result, but realistically, this really is something that should have been picked up by the solicitor in the first place, as without the research we've done, we could've been coughing up a couple of grand when we needn't have!

This transaction was based in Wales under the LTT (Land Transaction Tax), but presumably this also applies for properties in England, but I'm not 100% on that.