Stamp Duty Purchase to Rent Out / Second Home?

chaotic_j

Hi,

My partner and I are unmarried, living together in a house I own. My partner previously owned a property which was sold.

We're looking to buy a house together to rent out which is under the stamp duty threshold.

Would we need to pay 3% stamp duty when buying together? As I currently own a property so this purchase would be classed as a second home?

If my partner bought on her own would she still have to pay 3% because she wouldn't be living in it?

Thanks in advance.

jonnydeppiwish!

Yes you would, no they wouldn’t but pretty sure @SDLT_Geek will be along to confirm

grumbler

I'm no expert, but...

"You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

If you have not sold your main residence on the day you complete your new purchase you’ll have to pay higher rates. This is because you own 2 properties." 

- https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

I read this as both/either of you have to pay higher rate.

SDLT_Geek

chaotic_j said:

Hi,

My partner and I are unmarried, living together in a house I own. My partner previously owned a property which was sold.

We're looking to buy a house together to rent out which is under the stamp duty threshold.

Would we need to pay 3% stamp duty when buying together? As I currently own a property so this purchase would be classed as a second home?

If my partner bought on her own would she still have to pay 3% because she wouldn't be living in it?

Thanks in advance.

I am assuming the purchase would be of a property in England, so the relevant tax is stamp duty land tax.

If you buy together the extra 3% SDLT will be due on the whole purchase price because of your involvement and you having another property.

If your partner buys alone, without you having a share in the property, the extra 3% will not apply.  That is the case even though your partner intends to let it out.

chaotic_j

Thanks @SDLT_Geek yes the property is in England. Is it possible for my partner to buy and I take a share of the property at a later date or would this not be allowed?

p00hsticks

chaotic_j said:

Thanks @SDLT_Geek yes the property is in England. Is it possible for my partner to buy and I take a share of the property at a later date or would this not be allowed?

would they be giving you that share or would you be buying it off them ?

SDLT_Geek

chaotic_j said:

Thanks @SDLT_Geek yes the property is in England. Is it possible for my partner to buy and I take a share of the property at a later date or would this not be allowed?

The important point is whether your partner has enough money for your partner to buy on her own.  If she does, then the initial purchase should escape the extra 3%.

If later you “buy in” to her house as a separate exercise, or take a share with a corresponding liability to the mortgage, still owning your home, then I would expect you to have to pay the 3% surcharge on what is then the “chargeable consideration”.

chaotic_j

Hi @p00hsticks @SDLT_Geek my partner has the funds to buy the property on her own.

I can't really put forward more than say 20%. Would buying in 20% later mean I'd only have to pay 3% SDLT on 20% of the purchase price/value?

SDLT_Geek

chaotic_j said:

Hi @p00hsticks @SDLT_Geek my partner has the funds to buy the property on her own.

I can't really put forward more than say 20%. Would buying in 20% later mean I'd only have to pay 3% SDLT on 20% of the purchase price/value?

So your partner will be the sole owner of the property, she should therefore pay SDLT at standard rates on her purchase.

If you later buy a share from her, the SDLT position will depend on a number of factors.  The rules might have changed and it will depend on the value of the property and whether you still own the existing property. 

Assuming the rules are as they now, and that you will still own the existing property, then the SDLT will be at 3% if you end up acquiring the 20% share for "chargeable consideration" of between £40,000 and £250,000.  In working out the "chargeable consideration", it might not just be the cash sum you pay her which is relevant, but a proportion of the mortgage as well.

chaotic_j

Hi @SDLT_Geek the property is under SDLT threshold so would be nothing to pay for my partner.

If I come in later at 20% share this would be under £40,000 so again nothing to pay for me, assume I still own a property already.

But if I come in at 20% from the outset - we pay 3% SDLT on the entire purchase?

CSI_Yorkshire

chaotic_j said:

But if I come in at 20% from the outset - we pay 3% SDLT on the entire purchase?

Yes, as far as I understand it.

The 'chargeable consideration' for the purchase at the outset is the full price.

The 'chargeable consideration' for the later transfer only relates to the bit of ownership being transferred (i.e. 20% share, but as said it might not just be the cash bit).