Legal separation tax on property purchase

AskAsk

I and my husband are going to separate amicably and we are thinking of legal separation but we may end up with the divorce route.  For now, we are looking at legal separation.

We jointly own our home and I understand that if you legally separate, you can buy another home to replace your existing home without paying the extra 3% stamp duty.

He is thinking of buying a property with his parents and we believe that he is not subject to the 3% extra stamp duty even before the final separation order is complete?  That as long as it has been lodged, he can buy another property with his parents and not pay the extra stamp duty?

I am planning to buy him out of the property but I am going to sell and buy a smaller property later on.  I don't think there is any stamp duty to pay on the buyout?

When we subsequently sell our two separate homes, we won't be liable for capital gains tax either right?

Anyone with knowledge on tax situations on property on separation?

_Penny_Dreadful

AskAsk said:

I and my husband are going to separate amicably and we are thinking of legal separation but we may end up with the divorce route.  For now, we are looking at legal separation.

We jointly own our home and I understand that if you legally separate, you can buy another home to replace your existing home without paying the extra 3% stamp duty.

He is thinking of buying a property with his parents and we believe that he is not subject to the 3% extra stamp duty even before the final separation order is complete?  That as long as it has been lodged, he can buy another property with his parents and not pay the extra stamp duty?

I am planning to buy him out of the property but I am going to sell and buy a smaller property later on.  I don't think there is any stamp duty to pay on the buyout?

When we subsequently sell our two separate homes, we won't be liable for capital gains tax either right?

Anyone with knowledge on tax situations on property on separation?

As you jointly own the matrimonial home, even though you are agreeing to separate permanently then I think the higher rate of SDLT will apply on the purchase of the new property with his parents.  You would need to buy him out of the matrimonial home first (or at the same time as his purchase) for him to avoid the higher rate of SDLT.  Where the separation comes into play is that usually for SDLT purposes married couples are treated as a single economic unit, therefore, if one spouse owns a property and the other spouse buys a different property, the purchase will be subject to the higher rate of SDLT.  However, because you are permanently separated, even though not legally divorced, you could own the matrimonial home solely in your own name, he could buy the property with his parents, and the higher rate of SDLT would not be due.

CGT should not be due when either of you eventually sells because as a permanently separated couple, who each owns their own property, you should each get PPR on your respective sales.

At least I think that's the case.  Perhaps the forum's resident SDLT guru @SDLT_Geek could advise?

AskAsk

_Penny_Dreadful said:

AskAsk said:

I and my husband are going to separate amicably and we are thinking of legal separation but we may end up with the divorce route.  For now, we are looking at legal separation.

We jointly own our home and I understand that if you legally separate, you can buy another home to replace your existing home without paying the extra 3% stamp duty.

He is thinking of buying a property with his parents and we believe that he is not subject to the 3% extra stamp duty even before the final separation order is complete?  That as long as it has been lodged, he can buy another property with his parents and not pay the extra stamp duty?

I am planning to buy him out of the property but I am going to sell and buy a smaller property later on.  I don't think there is any stamp duty to pay on the buyout?

When we subsequently sell our two separate homes, we won't be liable for capital gains tax either right?

Anyone with knowledge on tax situations on property on separation?

As you jointly own the matrimonial home, even though you are agreeing to separate permanently then I think the higher rate of SDLT will apply on the purchase of the new property with his parents.  You would need to buy him out of the matrimonial home first (or at the same time as his purchase) for him to avoid the higher rate of SDLT.  Where the separation comes into play is that usually for SDLT purposes married couples are treated as a single economic unit, therefore, if one spouse owns a property and the other spouse buys a different property, the purchase will be subject to the higher rate of SDLT.  However, because you are permanently separated, even though not legally divorced, you could own the matrimonial home solely in your own name, he could buy the property with his parents, and the higher rate of SDLT would not be due.

CGT should not be due when either of you eventually sells because as a permanently separated couple, who each owns their own property, you should each get PPR on your respective sales.

At least I think that's the case.  Perhaps the forum's resident SDLT guru @SDLT_Geek could advise?

that is interesting comment about me having to buy him out before or at the same time as him buying the new house.  i am thinking that if a couple were to split up and they can no longer live together, so one will need to buy another property.  i was under the impression that the one that is moving out can buy another property straightaway because they need somewhere to live straightaway.

i will certainly check on that.  thanks for your thoughts.

sheramber

AskAsk said:

_Penny_Dreadful said:

AskAsk said:

I and my husband are going to separate amicably and we are thinking of legal separation but we may end up with the divorce route.  For now, we are looking at legal separation.

We jointly own our home and I understand that if you legally separate, you can buy another home to replace your existing home without paying the extra 3% stamp duty.

He is thinking of buying a property with his parents and we believe that he is not subject to the 3% extra stamp duty even before the final separation order is complete?  That as long as it has been lodged, he can buy another property with his parents and not pay the extra stamp duty?

I am planning to buy him out of the property but I am going to sell and buy a smaller property later on.  I don't think there is any stamp duty to pay on the buyout?

When we subsequently sell our two separate homes, we won't be liable for capital gains tax either right?

Anyone with knowledge on tax situations on property on separation?

As you jointly own the matrimonial home, even though you are agreeing to separate permanently then I think the higher rate of SDLT will apply on the purchase of the new property with his parents.  You would need to buy him out of the matrimonial home first (or at the same time as his purchase) for him to avoid the higher rate of SDLT.  Where the separation comes into play is that usually for SDLT purposes married couples are treated as a single economic unit, therefore, if one spouse owns a property and the other spouse buys a different property, the purchase will be subject to the higher rate of SDLT.  However, because you are permanently separated, even though not legally divorced, you could own the matrimonial home solely in your own name, he could buy the property with his parents, and the higher rate of SDLT would not be due.

CGT should not be due when either of you eventually sells because as a permanently separated couple, who each owns their own property, you should each get PPR on your respective sales.

At least I think that's the case.  Perhaps the forum's resident SDLT guru @SDLT_Geek could advise?

that is interesting comment about me having to buy him out before or at the same time as him buying the new house.  i am thinking that if a couple were to split up and they can no longer live together, so one will need to buy another property.  i was under the impression that the one that is moving out can buy another property straightaway because they need somewhere to live straightaway.

i will certainly check on that.  thanks for your thoughts.

There are conditions

Where a divorcing couple settle their divorce by agreement, they will usually formalise that agreement and make it legally binding by applying to the Court for a Consent Order. Such an order will satisfy the Para 9B test where they cover matters that would otherwise have been the subject of a Property Adjustment Order.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09797

AskAsk

sheramber said:

AskAsk said:

_Penny_Dreadful said:

AskAsk said:

I and my husband are going to separate amicably and we are thinking of legal separation but we may end up with the divorce route.  For now, we are looking at legal separation.

We jointly own our home and I understand that if you legally separate, you can buy another home to replace your existing home without paying the extra 3% stamp duty.

He is thinking of buying a property with his parents and we believe that he is not subject to the 3% extra stamp duty even before the final separation order is complete?  That as long as it has been lodged, he can buy another property with his parents and not pay the extra stamp duty?

I am planning to buy him out of the property but I am going to sell and buy a smaller property later on.  I don't think there is any stamp duty to pay on the buyout?

When we subsequently sell our two separate homes, we won't be liable for capital gains tax either right?

Anyone with knowledge on tax situations on property on separation?

As you jointly own the matrimonial home, even though you are agreeing to separate permanently then I think the higher rate of SDLT will apply on the purchase of the new property with his parents.  You would need to buy him out of the matrimonial home first (or at the same time as his purchase) for him to avoid the higher rate of SDLT.  Where the separation comes into play is that usually for SDLT purposes married couples are treated as a single economic unit, therefore, if one spouse owns a property and the other spouse buys a different property, the purchase will be subject to the higher rate of SDLT.  However, because you are permanently separated, even though not legally divorced, you could own the matrimonial home solely in your own name, he could buy the property with his parents, and the higher rate of SDLT would not be due.

CGT should not be due when either of you eventually sells because as a permanently separated couple, who each owns their own property, you should each get PPR on your respective sales.

At least I think that's the case.  Perhaps the forum's resident SDLT guru @SDLT_Geek could advise?

that is interesting comment about me having to buy him out before or at the same time as him buying the new house.  i am thinking that if a couple were to split up and they can no longer live together, so one will need to buy another property.  i was under the impression that the one that is moving out can buy another property straightaway because they need somewhere to live straightaway.

i will certainly check on that.  thanks for your thoughts.

There are conditions

Where a divorcing couple settle their divorce by agreement, they will usually formalise that agreement and make it legally binding by applying to the Court for a Consent Order. Such an order will satisfy the Para 9B test where they cover matters that would otherwise have been the subject of a Property Adjustment Order.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09797

this isn't reference to the extra 3% stamp duty though?

Hoenir

AskAsk said:

that is interesting comment about me having to buy him out before or at the same time as him buying the new house.  i am thinking that if a couple were to split up and they can no longer live together, so one will need to buy another property.  i was under the impression that the one that is moving out can buy another property straightaway because they need somewhere to live straightaway.

Finding somewhere to live doesn't require buying a property. Renting will suffice. 

AskAsk

Hoenir said:

AskAsk said:

that is interesting comment about me having to buy him out before or at the same time as him buying the new house.  i am thinking that if a couple were to split up and they can no longer live together, so one will need to buy another property.  i was under the impression that the one that is moving out can buy another property straightaway because they need somewhere to live straightaway.

Finding somewhere to live doesn't require buying a property. Renting will suffice. 

yeah, guess you are right

sheramber

AskAsk said:

sheramber said:

AskAsk said:

_Penny_Dreadful said:

AskAsk said:

I and my husband are going to separate amicably and we are thinking of legal separation but we may end up with the divorce route.  For now, we are looking at legal separation.

We jointly own our home and I understand that if you legally separate, you can buy another home to replace your existing home without paying the extra 3% stamp duty.

He is thinking of buying a property with his parents and we believe that he is not subject to the 3% extra stamp duty even before the final separation order is complete?  That as long as it has been lodged, he can buy another property with his parents and not pay the extra stamp duty?

I am planning to buy him out of the property but I am going to sell and buy a smaller property later on.  I don't think there is any stamp duty to pay on the buyout?

When we subsequently sell our two separate homes, we won't be liable for capital gains tax either right?

Anyone with knowledge on tax situations on property on separation?

As you jointly own the matrimonial home, even though you are agreeing to separate permanently then I think the higher rate of SDLT will apply on the purchase of the new property with his parents.  You would need to buy him out of the matrimonial home first (or at the same time as his purchase) for him to avoid the higher rate of SDLT.  Where the separation comes into play is that usually for SDLT purposes married couples are treated as a single economic unit, therefore, if one spouse owns a property and the other spouse buys a different property, the purchase will be subject to the higher rate of SDLT.  However, because you are permanently separated, even though not legally divorced, you could own the matrimonial home solely in your own name, he could buy the property with his parents, and the higher rate of SDLT would not be due.

CGT should not be due when either of you eventually sells because as a permanently separated couple, who each owns their own property, you should each get PPR on your respective sales.

At least I think that's the case.  Perhaps the forum's resident SDLT guru @SDLT_Geek could advise?

that is interesting comment about me having to buy him out before or at the same time as him buying the new house.  i am thinking that if a couple were to split up and they can no longer live together, so one will need to buy another property.  i was under the impression that the one that is moving out can buy another property straightaway because they need somewhere to live straightaway.

i will certainly check on that.  thanks for your thoughts.

There are conditions

Where a divorcing couple settle their divorce by agreement, they will usually formalise that agreement and make it legally binding by applying to the Court for a Consent Order. Such an order will satisfy the Para 9B test where they cover matters that would otherwise have been the subject of a Property Adjustment Order.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09797

this isn't reference to the extra 3% stamp duty though?

Heading to text is

SDLTM09797 - SDLT - higher rates for additional dwellings: Condition C - divorce and civil partnership dissolution