SDLT buying out ex partner

kellylucinda86

I'm buying out my ex partner out of our jointly owned property (transfer of equity). We are not married and I'm ending up having to give him £36,000 even though he only put £11k into the house 3 years ago and lived in it for 5 months, due to the increase in value he is entitled to half. I've just been told by the solicitors I will have to pay SDLT on the buyout share as I own other property. The SDLT equates to £2850 based on the remaining mortgage amount and the monies I am giving to my ex. If your married and have a separation agreement you don't have to pay anything! I really find this unfair. 
Anyway I was thinking of putting my rental properties into a LTD company I know I would have SDLT to pay but it would mean I wouldn't pay it on the transfer of my own house so technically getting one transferred to a LTD company for free. (I have 3 properties to transfer).
Can anyone tell me how the price of the property is determined of each house? Would I need valuations? Would the ones on the mortgage company statement suffice? 
Also my mortgages have just been renewed on very high interest rates (6%) jumped from 3% so this would be another reason to put in a LTD would I also need to change the mortgages to different ones? 
Also I read something about transferring multiple properties at the same time an 'average' is calculated? Maybe totally wrong about this as was the early hours when I was reading it 
Sorry lots of questions. Hopefully someone has got the answers!

Keep_pedalling

 That does not sound right any SDLT that is owed on this transaction is nothing to do with you owning other properties and the extra 3% does not apply as you are not buying a 5th property. Moving your rental properties to a limited company won’t save you SDLT on your current transaction and you have also not taken your potential CGT liability into account with the Ltd company idea.

If you don’t already have one perhaps it is time to engage the services of an accountant.

kellylucinda86

it's definately payable as it explains it on the HMRC website I've screen shotted it. Just not sure why when your married it makes a difference to been unmarried it really is unfair. The solicitor has said the stamp duty is the higher rate of stamp duty payable due to me owning other property the extra 3% the normal 3% isn't payable as the transfer amount is under the SDLT threshold which I think is 250k or more after the announcement. So if I didn't own any other property in my name (transfering to a LTD) then the 3% higher rate wouldn't be payable so I wouldn't pay any and that monies could be used to pay the SDLT on transferring one of the others into the LTD. But I have completely forgotten about capital gains tax I definitely can't afford to fork out for that! 

SDLT_Geek

kellylucinda86 said:

I'm buying out my ex partner out of our jointly owned property (transfer of equity). We are not married and I'm ending up having to give him £36,000 even though he only put £11k into the house 3 years ago and lived in it for 5 months, due to the increase in value he is entitled to half. I've just been told by the solicitors I will have to pay SDLT on the buyout share as I own other property. The SDLT equates to £2850 based on the remaining mortgage amount and the monies I am giving to my ex. If your married and have a separation agreement you don't have to pay anything! I really find this unfair. 
Anyway I was thinking of putting my rental properties into a LTD company I know I would have SDLT to pay but it would mean I wouldn't pay it on the transfer of my own house so technically getting one transferred to a LTD company for free. (I have 3 properties to transfer).
Can anyone tell me how the price of the property is determined of each house? Would I need valuations? Would the ones on the mortgage company statement suffice? 
Also my mortgages have just been renewed on very high interest rates (6%) jumped from 3% so this would be another reason to put in a LTD would I also need to change the mortgages to different ones? 
Also I read something about transferring multiple properties at the same time an 'average' is calculated? Maybe totally wrong about this as was the early hours when I was reading it 
Sorry lots of questions. Hopefully someone has got the answers!

I wonder if there is a special rule which has been missed here?

It is the rule that the 3% extra does not apply when enlarging one's interest in a property which you have lived in for your main residence throughout the previous three years.

I wonder if the conditions for that are met here?  You mention money having been put in three years ago.

The guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09814 should help you.

kellylucinda86

SDLT_Geek said:

kellylucinda86 said:

I'm buying out my ex partner out of our jointly owned property (transfer of equity). We are not married and I'm ending up having to give him £36,000 even though he only put £11k into the house 3 years ago and lived in it for 5 months, due to the increase in value he is entitled to half. I've just been told by the solicitors I will have to pay SDLT on the buyout share as I own other property. The SDLT equates to £2850 based on the remaining mortgage amount and the monies I am giving to my ex. If your married and have a separation agreement you don't have to pay anything! I really find this unfair. 
Anyway I was thinking of putting my rental properties into a LTD company I know I would have SDLT to pay but it would mean I wouldn't pay it on the transfer of my own house so technically getting one transferred to a LTD company for free. (I have 3 properties to transfer).
Can anyone tell me how the price of the property is determined of each house? Would I need valuations? Would the ones on the mortgage company statement suffice? 
Also my mortgages have just been renewed on very high interest rates (6%) jumped from 3% so this would be another reason to put in a LTD would I also need to change the mortgages to different ones? 
Also I read something about transferring multiple properties at the same time an 'average' is calculated? Maybe totally wrong about this as was the early hours when I was reading it 
Sorry lots of questions. Hopefully someone has got the answers!

I wonder if there is a special rule which has been missed here?

It is the rule that the 3% extra does not apply when enlarging one's interest in a property which you have lived in for your main residence throughout the previous three years.

I wonder if the conditions for that are met here?  You mention money having been put in three years ago.

The guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09814 should help you.

Omg thank you so much, it seems like it does. House was purchased over 3 years ago and has been my only main residence. I've just emailed it to my solicitor it seems like he doesn't know his stuff 😏 I was on the phone to the SDLT helpline for an hour this afternoon as I just couldn't get my head round having to pay it as I already paid £2900 when purchasing this house and that was on the full amount of the property price not just 'my share' of the house so I would have been paying it twice! 

Let's hope he comes back to me tomorrow with the answer I want to hear! 
I've sat down and worked out how much capital gains tax and SDLT I'd have to pay to put my properties into a LTD company and it would total about 20k so I don't think it would be viable. 

kellylucinda86

SDLT_Geek said:

kellylucinda86 said:

I'm buying out my ex partner out of our jointly owned property (transfer of equity). We are not married and I'm ending up having to give him £36,000 even though he only put £11k into the house 3 years ago and lived in it for 5 months, due to the increase in value he is entitled to half. I've just been told by the solicitors I will have to pay SDLT on the buyout share as I own other property. The SDLT equates to £2850 based on the remaining mortgage amount and the monies I am giving to my ex. If your married and have a separation agreement you don't have to pay anything! I really find this unfair. 
Anyway I was thinking of putting my rental properties into a LTD company I know I would have SDLT to pay but it would mean I wouldn't pay it on the transfer of my own house so technically getting one transferred to a LTD company for free. (I have 3 properties to transfer).
Can anyone tell me how the price of the property is determined of each house? Would I need valuations? Would the ones on the mortgage company statement suffice? 
Also my mortgages have just been renewed on very high interest rates (6%) jumped from 3% so this would be another reason to put in a LTD would I also need to change the mortgages to different ones? 
Also I read something about transferring multiple properties at the same time an 'average' is calculated? Maybe totally wrong about this as was the early hours when I was reading it 
Sorry lots of questions. Hopefully someone has got the answers!

I wonder if there is a special rule which has been missed here?

It is the rule that the 3% extra does not apply when enlarging one's interest in a property which you have lived in for your main residence throughout the previous three years.

I wonder if the conditions for that are met here?  You mention money having been put in three years ago.

The guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09814 should help you.

Well I gave my solicitor the above information and he has said that this is for leasehold properties 😩 I've read it all and it doesn't read as though it's all for leasehold properties as one of the criteria says 'in the case of leasehold properties' so to me that means the rest doesn't need to be leasehold. 
I'm still none the wiser if my solicitor is telling me I have to pay it. 
Any further advice appreciated. Thanks

SDLT_Geek

kellylucinda86 said:

SDLT_Geek said:

kellylucinda86 said:

I'm buying out my ex partner out of our jointly owned property (transfer of equity). We are not married and I'm ending up having to give him £36,000 even though he only put £11k into the house 3 years ago and lived in it for 5 months, due to the increase in value he is entitled to half. I've just been told by the solicitors I will have to pay SDLT on the buyout share as I own other property. The SDLT equates to £2850 based on the remaining mortgage amount and the monies I am giving to my ex. If your married and have a separation agreement you don't have to pay anything! I really find this unfair. 
Anyway I was thinking of putting my rental properties into a LTD company I know I would have SDLT to pay but it would mean I wouldn't pay it on the transfer of my own house so technically getting one transferred to a LTD company for free. (I have 3 properties to transfer).
Can anyone tell me how the price of the property is determined of each house? Would I need valuations? Would the ones on the mortgage company statement suffice? 
Also my mortgages have just been renewed on very high interest rates (6%) jumped from 3% so this would be another reason to put in a LTD would I also need to change the mortgages to different ones? 
Also I read something about transferring multiple properties at the same time an 'average' is calculated? Maybe totally wrong about this as was the early hours when I was reading it 
Sorry lots of questions. Hopefully someone has got the answers!

I wonder if there is a special rule which has been missed here?

It is the rule that the 3% extra does not apply when enlarging one's interest in a property which you have lived in for your main residence throughout the previous three years.

I wonder if the conditions for that are met here?  You mention money having been put in three years ago.

The guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09814 should help you.

Well I gave my solicitor the above information and he has said that this is for leasehold properties 😩 I've read it all and it doesn't read as though it's all for leasehold properties as one of the criteria says 'in the case of leasehold properties' so to me that means the rest doesn't need to be leasehold. 
I'm still none the wiser if my solicitor is telling me I have to pay it. 
Any further advice appreciated. Thanks

Your solicitor appears to be incompetent!  The rule is clearly not limited to leasehold properties.  

I will see what else I can look out for you.

SDLT_Geek

Here is the relevant legislation, from Finance Act 2003 / Schedule 4ZA.


7A Exception where purchaser has prior interest in purchased dwelling

(1) A chargeable transaction which would (but for this paragraph) fall within paragraph 3 or paragraph 6 does not fall within that paragraph if—

(a) the purchaser had a major interest (“the prior interest”) in the relevant purchased dwelling immediately before the effective date of the transaction, and

(b) the relevant purchased dwelling had been the purchaser's only or main residence throughout the period of three years ending with the effective date of the transaction.

(2) Sub-paragraph (1) does not apply if—

(a) the prior interest is a term of years absolute or a leasehold estate, and

(b) immediately before the effective date of the transaction, the remaining term of the prior interest is less than 21 years.

(3) Sub-paragraph (1) does not apply if immediately before the effective date of the transaction—

(a) the purchaser is beneficially entitled as a joint tenant to the prior interest, and

(b) there are more than three other joint tenants.

(4) Sub-paragraph (1) does not apply if immediately before the effective date of the transaction the purchaser is beneficially entitled as a tenant in common or coparcener to less than a quarter of the prior interest.

(5) In this paragraph “relevant purchased dwelling” means—

(a) the purchased dwelling mentioned in paragraph 3(1)(b), or (as the case may be)

(b) the purchased dwelling which meets the conditions mentioned in paragraph 6(1)(c).

I have put the wording which helps you in bold (at para 7A(1)).  If your purchase had fallen within Schedule 4ZA paragraph 3 the extra 3% would be due.  But para 7A(1) is saying that your transaction does not fall within para 3 because:

(a)  You already had a prior interest (your part share) and

(b) You have lived in the property as your only residence throughout the last three years.

There are exceptions in paras (2) to (4).  If any of them applied you could not rely on the special rule.  But none of them do apply.  For example, for para (4) you start with much more than a quarter share.

housebuyer143

kellylucinda86 said:

SDLT_Geek said:

kellylucinda86 said:

I'm buying out my ex partner out of our jointly owned property (transfer of equity). We are not married and I'm ending up having to give him £36,000 even though he only put £11k into the house 3 years ago and lived in it for 5 months, due to the increase in value he is entitled to half. I've just been told by the solicitors I will have to pay SDLT on the buyout share as I own other property. The SDLT equates to £2850 based on the remaining mortgage amount and the monies I am giving to my ex. If your married and have a separation agreement you don't have to pay anything! I really find this unfair. 
Anyway I was thinking of putting my rental properties into a LTD company I know I would have SDLT to pay but it would mean I wouldn't pay it on the transfer of my own house so technically getting one transferred to a LTD company for free. (I have 3 properties to transfer).
Can anyone tell me how the price of the property is determined of each house? Would I need valuations? Would the ones on the mortgage company statement suffice? 
Also my mortgages have just been renewed on very high interest rates (6%) jumped from 3% so this would be another reason to put in a LTD would I also need to change the mortgages to different ones? 
Also I read something about transferring multiple properties at the same time an 'average' is calculated? Maybe totally wrong about this as was the early hours when I was reading it 
Sorry lots of questions. Hopefully someone has got the answers!

I wonder if there is a special rule which has been missed here?

It is the rule that the 3% extra does not apply when enlarging one's interest in a property which you have lived in for your main residence throughout the previous three years.

I wonder if the conditions for that are met here?  You mention money having been put in three years ago.

The guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09814 should help you.

Well I gave my solicitor the above information and he has said that this is for leasehold properties 😩 I've read it all and it doesn't read as though it's all for leasehold properties as one of the criteria says 'in the case of leasehold properties' so to me that means the rest doesn't need to be leasehold. 
I'm still none the wiser if my solicitor is telling me I have to pay it. 
Any further advice appreciated. Thanks

Solicitors don't like to be told they are wrong even when you know 100% you are and can prove it. I had a similar issue with mine. I must have done hours of reading into the issue and had written proof she was wrong from the land registry and she wouldn't budge. 

Send them the stuff above and then if no joy I would escalate it to a senior partner. They are not your mate, don't worry about !!!!!! them off.

EssexHebridean

You can always simply say you will deal with the SDLT aspect yourself. The solicitor will expect you to sign a letter confirming that you take full responsibility for the submission of the return and the payment (or not, hopefully!), but it’s perfectly possible to deal with it yourself, and should save you the legal fees for the submission.

housebuyer143

EssexHebridean said:

You can always simply say you will deal with the SDLT aspect yourself. The solicitor will expect you to sign a letter confirming that you take full responsibility for the submission of the return and the payment (or not, hopefully!), but it’s perfectly possible to deal with it yourself, and should save you the legal fees for the submission.

They won't let you though if you are getting a mortgage.