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Spouse using proceeds from my sale as first-time buyer?

Hello. my wife and I are looking to move house. Our current home is in my name only from years back. We're wondering if, to buy our new home, it could be in her name only, if she would be eligible for first-time buyer SDLT relief and be able to use the proceeds from the sale of my property towards our new home?
Feels like a loophole in the SDLT relief but possibly acceptable...
Would it count as a gift and therefor just inheritance tax we'd need to be wary of?
Thanks
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  • user1977
    user1977 Posts: 13,332
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    edited 24 January at 10:53AM
    mattcd216 said:
    Hello. my wife and I are looking to move house. Our current home is in my name only from years back. We're wondering if, to buy our new home, it could be in her name only, if she would be eligible for first-time buyer SDLT relief and be able to use the proceeds from the sale of my property towards our new home?
    Feels like a loophole in the SDLT relief but possibly acceptable...
    Would it count as a gift and therefor just inheritance tax we'd need to be wary of?
    Thanks
    There is no such loophole, they weren't daft enough to allow each half of a married couple to pretend to be a first time buyer for successive properties.

    Inheritance tax isn't an issue anyway (assuming you're still married when the first of you dies!), there's no tax on the estate passing to a surviving spouse.
  • SDLT_Geek
    SDLT_Geek Posts: 2,429
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    user1977 said:
    mattcd216 said:
    Hello. my wife and I are looking to move house. Our current home is in my name only from years back. We're wondering if, to buy our new home, it could be in her name only, if she would be eligible for first-time buyer SDLT relief and be able to use the proceeds from the sale of my property towards our new home?
    Feels like a loophole in the SDLT relief but possibly acceptable...
    Would it count as a gift and therefor just inheritance tax we'd need to be wary of?
    Thanks
    There is no such loophole, they weren't daft enough to allow each half of a married couple to pretend to be a first time buyer for successive properties.

    Inheritance tax isn't an issue anyway (assuming you're still married when the first of you dies!), there's no tax on the estate passing to a surviving spouse.
    On the SDLT, the rules are rather strange for first time buyers' relief when it comes to spouses.  There are no equivalent special provisions to those for the 3% surcharge for husband and wife cases. So this could be worth looking into, if neither OP nor the spouse have another property.

    A lender might not like the proposed structure.
  • sheramber
    sheramber Posts: 18,636
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    Are you sure ?  Thhis would imply otherwise.  As long as the wife is buying sole and it is not a second hime, where married couples are regarded as one.

    https://thomtax.co.uk/guide-to-first-time-buyer-stamp-duty/

     “What counts as a ‘first-time buyer’ in the eyes of the law?” It’s a good question. A first-time buyer is defined rather simply. It’s someone who has never owned property before, whether that’s in the UK or overseas. 
    .....
    Another point to note is the combined income of all buyers involved in the property purchase is taken into account when assessing eligibility. This is important if you’re planning to buy property with someone else. To remain eligible for first-time buyer tax breaks, everyone named on the purchasing contract must be first-time buyers.

    There is also this article in the Guardian

    https://www.theguardian.com/money/2020/feb/24/does-being-married-stop-me-from-being-a-first-time-buyer
  • p00hsticks
    p00hsticks Posts: 12,582
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    sheramber said:
    The answer given in that article has the proviso 'Provided your spouse doesn’t already own property' , which would make the reply not applicable to the OP's case. 
  • SDLT_Geek
    SDLT_Geek Posts: 2,429
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    sheramber said:
    Are you sure ?  Thhis would imply otherwise.  As long as the wife is buying sole and it is not a second hime, where married couples are regarded as one.

    https://thomtax.co.uk/guide-to-first-time-buyer-stamp-duty/

     “What counts as a ‘first-time buyer’ in the eyes of the law?” It’s a good question. A first-time buyer is defined rather simply. It’s someone who has never owned property before, whether that’s in the UK or overseas. 
    .....
    Another point to note is the combined income of all buyers involved in the property purchase is taken into account when assessing eligibility. This is important if you’re planning to buy property with someone else. To remain eligible for first-time buyer tax breaks, everyone named on the purchasing contract must be first-time buyers.

    There is also this article in the Guardian

    https://www.theguardian.com/money/2020/feb/24/does-being-married-stop-me-from-being-a-first-time-buyer
    This is indeed a tricky area of SDLT!

    If at the time OP's wife buys a new home alone, OP no longer owns the property OP is selling, then first time buyers' relief is not lost by the effect of the 3% surcharge to SDLT applying.  (The 3% surcharge, where it applies, trumps FTB status.)

    If the wife is genuinely the only buyer / beneficial owner of the new home and intends to live in it as her only or main residence, and it is in the right price bracket to qualify for relief, then FTB relief is worth looking at.
  • user1977
    user1977 Posts: 13,332
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    SDLT_Geek said:
    sheramber said:
    Are you sure ?  Thhis would imply otherwise.  As long as the wife is buying sole and it is not a second hime, where married couples are regarded as one.

    https://thomtax.co.uk/guide-to-first-time-buyer-stamp-duty/

     “What counts as a ‘first-time buyer’ in the eyes of the law?” It’s a good question. A first-time buyer is defined rather simply. It’s someone who has never owned property before, whether that’s in the UK or overseas. 
    .....
    Another point to note is the combined income of all buyers involved in the property purchase is taken into account when assessing eligibility. This is important if you’re planning to buy property with someone else. To remain eligible for first-time buyer tax breaks, everyone named on the purchasing contract must be first-time buyers.

    There is also this article in the Guardian

    https://www.theguardian.com/money/2020/feb/24/does-being-married-stop-me-from-being-a-first-time-buyer
    This is indeed a tricky area of SDLT!

    If at the time OP's wife buys a new home alone, OP no longer owns the property OP is selling, then first time buyers' relief is not lost by the effect of the 3% surcharge to SDLT applying.  (The 3% surcharge, where it applies, trumps FTB status.)

    If the wife is genuinely the only buyer / beneficial owner of the new home and intends to live in it as her only or main residence, and it is in the right price bracket to qualify for relief, then FTB relief is worth looking at.
    I'm not sure if that can ever be the case where it's the matrimonial home? Surely the spouse who isn't on the title is going to have a beneficial interest? Different if it was e.g. an investment property.
  • Ditzy_Mitzy
    Ditzy_Mitzy Posts: 1,838
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    SDLT_Geek said:
    sheramber said:
    Are you sure ?  Thhis would imply otherwise.  As long as the wife is buying sole and it is not a second hime, where married couples are regarded as one.

    https://thomtax.co.uk/guide-to-first-time-buyer-stamp-duty/

     “What counts as a ‘first-time buyer’ in the eyes of the law?” It’s a good question. A first-time buyer is defined rather simply. It’s someone who has never owned property before, whether that’s in the UK or overseas. 
    .....
    Another point to note is the combined income of all buyers involved in the property purchase is taken into account when assessing eligibility. This is important if you’re planning to buy property with someone else. To remain eligible for first-time buyer tax breaks, everyone named on the purchasing contract must be first-time buyers.

    There is also this article in the Guardian

    https://www.theguardian.com/money/2020/feb/24/does-being-married-stop-me-from-being-a-first-time-buyer
    This is indeed a tricky area of SDLT!

    If at the time OP's wife buys a new home alone, OP no longer owns the property OP is selling, then first time buyers' relief is not lost by the effect of the 3% surcharge to SDLT applying.  (The 3% surcharge, where it applies, trumps FTB status.)

    If the wife is genuinely the only buyer / beneficial owner of the new home and intends to live in it as her only or main residence, and it is in the right price bracket to qualify for relief, then FTB relief is worth looking at.
    Interesting, however if the OP is required to sell his house before his wife buys the new one, there will be a requirement to move house twice rather than once (the couple and, if applicable, their children will have to live somewhere).  Doing that doubles up moving costs and leaves them out of the market, even for a short time.  They will also have to either rent somewhere or move in with family.  Neither is ideal: renting is expensive and living with family usually means compromising on space, which in turn pushes one in the direction of the self-storage firms.  Self-storage is very dear.  

    Going through all that rigmarole could quickly exceed the value of the stamp, were the couple to buy the new house in the normal fashion.  
  • pjs493
    pjs493 Posts: 156
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    My husband and I were advised not to add me to the mortgage of the flat he bought years before we married by a qualified financial advisor. The flat has been rented out for years because we had to move around with his job. Our family then grew so that the flat is now too small for our needs. 

    I’d never owned a property so we were told that if we planned to buy a second property, either as a second rental property or as a home to live in, if I applied for a sole mortgage I could benefit from first time buyer incentives. With this advice we decided not to add me to the flat mortgage. 

    The deposit could come from joint savings as well as from our individual ISAs. Last year we sold a valuable asset to help towards a deposit too. 

    Unfortunately my husband died unexpectedly a few months later while we were house hunting so our plan never came to fruition. Following his death I’ve inherited the flat and will have to pay off the mortgage once I receive the Grant of Probate. 

    Presumably now that I will very shortly own property, despite having never bought a property, I can no longer be considered a first time buyer. I’m currently considering my options of buying somewhere as planned or selling the flat to buy a bigger house that could be a forever home for me and our children. 
  • sheramber
    sheramber Posts: 18,636
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    But how much in advance does the husband's property need to be sold?

    His sold with entry 12 o'clock - wife' house bought with entry 3 o'clock. 

    Household goods in removal van for three hours in between.
  • jonnydeppiwish!
    jonnydeppiwish! Posts: 1,108
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    pjs493 said:
    My husband and I were advised not to add me to the mortgage of the flat he bought years before we married by a qualified financial advisor. The flat has been rented out for years because we had to move around with his job. Our family then grew so that the flat is now too small for our needs. 

    I’d never owned a property so we were told that if we planned to buy a second property, either as a second rental property or as a home to live in, if I applied for a sole mortgage I could benefit from first time buyer incentives. With this advice we decided not to add me to the flat mortgage. 

    The deposit could come from joint savings as well as from our individual ISAs. Last year we sold a valuable asset to help towards a deposit too. 

    Unfortunately my husband died unexpectedly a few months later while we were house hunting so our plan never came to fruition. Following his death I’ve inherited the flat and will have to pay off the mortgage once I receive the Grant of Probate. 

    Presumably now that I will very shortly own property, despite having never bought a property, I can no longer be considered a first time buyer. I’m currently considering my options of buying somewhere as planned or selling the flat to buy a bigger house that could be a forever home for me and our children. 
    Sorry for your loss. Assuming you don’t register the flat in your name, get the tenants to leave, you could sell the flat and just take the proceeds. Then you have still never owned a property….
    2006 LBM £28,000+ in debt.
    2021 mortgage and debt free, working part time and living the dream
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