Stamp duty and usufruct

Vox1983

Hi, I was wondering if anyone might have experience with this, or insight they're willing to share.

My husband and I live in England and own one house that we live in. Actually the deeds are in his name. We are looking to buy another house which would replace this one as our residence. 

I’m on the deeds of another property overseas (in the EU) as a bare owner, with my father having usufruct rights for life. We have this written down in a contract between him and me and my sister and it’s recorded in the local land registry. My share is 1/6th or about 17%. I’m not sure about the exact market value of the house but I believe my share is worth more than £40,000. 

There are three other owners of the entire property. There are no clear boundaries in the sense that there's a record of which unit of the property belongs to which owner. The shares are applied to the property as a whole. 

This house is not my father's main residence, it’s a holiday house used primarily for renting. He collects the income associated with his share (my sister and I are entitled to none) and he pays all the taxes, fees and expenses associated with his/our share of the property. His name is on the insurance and on the renting permit. 

We have access to the house in the sense that we can visit as family members but only until he withdraws his permission. He can use his/our share of the house as he sees fit including making changes to it without seeking our permission.

The property has been in the family since my grandfather built it decades ago. Other owners are also family members. There is no mortgage on the house.

Would my husband and I be obliged to pay the SDLT surcharge when buying a house that would replace our residence? I understand that the HMRC doesn’t have a fixed view on these things. 

There seem to be a lot of different opinions online for similar situations but hardly any actual experiences so it’s hard to guess what the outcome might be. But any help is welcome. 

Thanks so much!

Vox1983

Just to clarify, my husband and I want to sell our current residence and buy another one. 

SDLT_Geek

Vox1983 said:

Hi, I was wondering if anyone might have experience with this, or insight they're willing to share.

My husband and I live in England and own one house that we live in. Actually the deeds are in his name. We are looking to buy another house which would replace this one as our residence. 

I’m on the deeds of another property overseas (in the EU) as a bare owner, with my father having usufruct rights for life. We have this written down in a contract between him and me and my sister and it’s recorded in the local land registry. My share is 1/6th or about 17%. I’m not sure about the exact market value of the house but I believe my share is worth more than £40,000. 

There are three other owners of the entire property. There are no clear boundaries in the sense that there's a record of which unit of the property belongs to which owner. The shares are applied to the property as a whole. 

This house is not my father's main residence, it’s a holiday house used primarily for renting. He collects the income associated with his share (my sister and I are entitled to none) and he pays all the taxes, fees and expenses associated with his/our share of the property. His name is on the insurance and on the renting permit. 

We have access to the house in the sense that we can visit as family members but only until he withdraws his permission. He can use his/our share of the house as he sees fit including making changes to it without seeking our permission.

The property has been in the family since my grandfather built it decades ago. Other owners are also family members. There is no mortgage on the house.

Would my husband and I be obliged to pay the SDLT surcharge when buying a house that would replace our residence? I understand that the HMRC doesn’t have a fixed view on these things. 

There seem to be a lot of different opinions online for similar situations but hardly any actual experiences so it’s hard to guess what the outcome might be. But any help is welcome. 

Thanks so much!

This is likely to be much simpler than you seem to think.  So long as, because of your husband selling the property you both live in, the "replacement exception" to the 3% surcharge applies, then it would not matter a jot what other property interests you may have.  You need to work through the five conditions to the replacement exception, applying them to you (you are the one who might have an interest in another property) and see if you meet them.  They are set out well here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

Vox1983

That answers it! Example 1 on Condition D - further examples describes us almost to a T (sorry I can't post links yet). 
Thank you so much!