Buying out siblings- is stamp duty payable?

E201

Good afternoon everyone, 

I wanted to get your advice re- whether stamp duty is payable when a sibling is buying out their other siblings from a property (the family home).  If stamp duty is payable is it on the value of the property as a whole or just the portion from the siblings that is being purchased.

Background:
- Property value is £825,000 No mortgage
- The sibling buying out the others owns 58% of the property outright (through inheritance) and has been living in the property for over 20 years.

I really appreciate your thoughts. 

Kind regards, 
Bill

DE_612183

You pay stamp Duty on the chargeable Consideration - so in this case it would be 42% of the 825 ( Split across the rates ) - so about £4800

DE_612183

Thinking about it - it may be worth looking into buying as two or more separate transactions as the first 250k is free - so it they are treated as two separate transaction you may not pay anything - I don't know enough about the rules though to know if this is correct.

Bookworm105

There is no exemption from SDLT when purchasing further shares in a property you already own.
In your case it appears to be the only property owned by the sibling looking to buy the others out so standard rate SDLT applies/
How much is payable depends on the numbers, as hinted at in the reply above.

user1977

DE_612183 said:

Thinking about it - it may be worth looking into buying as two or more separate transactions as the first 250k is free - so it they are treated as two separate transaction you may not pay anything - I don't know enough about the rules though to know if this is correct.

No, that would be a fairly obvious and wide open loophole! You need to declare transactions which are linked (and the tax is based on the aggregate figures).

DE_612183

user1977 said:

DE_612183 said:

Thinking about it - it may be worth looking into buying as two or more separate transactions as the first 250k is free - so it they are treated as two separate transaction you may not pay anything - I don't know enough about the rules though to know if this is correct.

No, that would be a fairly obvious and wide open loophole! You need to declare transactions which are linked (and the tax is based on the aggregate figures).

I thought as much - but you never know!

E201

OK thanks everyone for your thoughts and comments. It looks like SDLT (at 5%) is payable on the 42% of the property's value which siblings own together. 

DE_612183

E201 said:

OK thanks everyone for your thoughts and comments. It looks like SDLT (at 5%) is payable on the 42% of the property's value which siblings own together. 

It's only 5% on the bit above 250k

E201

Oh yes of course. Thanks very much!

silvercar

user1977 said:

DE_612183 said:

Thinking about it - it may be worth looking into buying as two or more separate transactions as the first 250k is free - so it they are treated as two separate transaction you may not pay anything - I don't know enough about the rules though to know if this is correct.

No, that would be a fairly obvious and wide open loophole! You need to declare transactions which are linked (and the tax is based on the aggregate figures).

Not necessarily disagreeing with you, but people often staircase on shared ownership properties, where they buy further shares of the property in stages, so I wouldn’t automatically say that it is a loophole. 

https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-first-transaction

user1977

silvercar said:

user1977 said:

DE_612183 said:

Thinking about it - it may be worth looking into buying as two or more separate transactions as the first 250k is free - so it they are treated as two separate transaction you may not pay anything - I don't know enough about the rules though to know if this is correct.

No, that would be a fairly obvious and wide open loophole! You need to declare transactions which are linked (and the tax is based on the aggregate figures).

Not necessarily disagreeing with you, but people often staircase on shared ownership properties, where they buy further shares of the property in stages, so I wouldn’t automatically say that it is a loophole. 

https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-first-transaction

Yes, but those are quite specific provisions for shared ownership properties.

You can't just split up the price in a "normal" transaction into tax-free chunks, otherwise that's what everybody would do.