Discretionary trust and stamp duty question

scrub

My friend's mother is selling her old home and buying a new one by a discretionary trust. The trust has three trustees: the settlor (the mother, purchasing the new property) and two others. The two others (children of the settlor) each own one mortgaged property, which is their home.

Does the purchase of the new property trigger the additional 3% stamp duty?

Secondly, if one of the children wants to buy a new property (and sell the old one) will they then have to pay additional stamp duty on top of the standard.

Keep_pedalling

Is her existing home already being held in the trust? If so I would be more worried by a CGT hit on the sale of that property than stamp duty which I don’t think applies.

If not what is the reasoning buying via a DT? I can’t see any tax advantages in doing that and may actually lead to more tax.

scrub

Keep_pedalling said:

Is her existing home already being held in the trust? If so I would be more worried by a CGT hit on the sale of that property than stamp duty which I don’t think applies.

If not what is the reasoning buying via a DT? I can’t see any tax advantages in doing that and may actually lead to more tax.

Yes, the current house is in trust so she has to use that to buy the new house. 

scrub

So CGT is one thing.

What about if the brother/ sister want to move house? Will they be subject to additional stamp duty?

Jeremy535897

See https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#trusts

As noted above, this is likely to be a bad idea from a tax point of view.

flipper_72

Similar situation, mum left her half of the house in trust to us children. Dad is now moving so as the new house is in trust he/we are having to pay additional 3% . We are also in the process of moving but as we are selling our main residence and buying our next main residence we do not need to pay the additional 3%.

flipper_72

Clearly it isn’t great from a tax point of view but when the will was written it was to protect the house from care home fees (I think). We children discussed the implications for this move and decided an extra 10k stamp duty protected 200k of house so was probably worth it if dad ended up needing paid for care (as mum did).

Jeremy535897

It doesn't help with that either, at least where it is the settlor who goes into care, as the council are likely to argue there has been a deprivation of assets.