SDLT and amount to pay for other half of property

pumas

Edit - This has turned out not to be the simple question I thought,  and I don't know how to close it, so please spend no more time on it. Thanks to all who have given their time and expertise.
The answers have given me enormous food for thought.

Buying out other Tenant-in-Common, a sibling.

I now live in the property, they never have.

Property valued at 400k, but I paid 100k for refurb, so 

should I pay 150k to sibling. I'm not sure this sounds right.

Is the SDLT payable, minus 125k allowance, on 150k or 200k?

theartfullodger

Pay whatever you BOTH agree.  There are no rules.

pumas

The deeper I get into SDLT & CGT the more complicated it gets. They seem to be based on 'market' values rather than the purchase amount. (I'd pay sibling much less if I could!)

RHemmings

Paging @SDLT_Geek, if possible. (I always hope paging people is not rude.) 

Bookworm105

pumas said:

The deeper I get into SDLT & CGT the more complicated it gets. They seem to be based on 'market' values rather than the purchase amount. (I'd pay sibling much less if I could!)

CGT
- Sibling is selling their share of a property it appears they have never (please confirm) lived in 
- Sibling is therefore liable for CGT 
- you are the buyer, you are not liable for any CGT
- because you are siblings and therefore "connected persons", sibling's CGT is based on the market value at point of sale, not the actual price paid (to negate obvious price manipulation)

despite your language of "I paid 100k refurbishment" cost, you then imply 50% of that is attributable to sibling. 
Please confirm how much sibling actually paid in real money? If he paid nothing, then he can't claim costs against his CGT
Subject to the above, what do you mean by "refurbishment"?. To claim costs against CGT they have to be wholly capital in nature, but "refurb" work includes much that is classed as repair not capital improvement.

you are the buyer, so you will not be paying any CGT at all.
If your question is really asking how much CGT will sibling pay when selling their share so you can reflect that in the amount you pay them, then that cannot be answered on here as we do not have enough info about sibling to work it out. (Original price paid by sibling? What is sibling's taxable income this year? Does sibling have other capital gains this year?)

SDLT 
Payable only by the buyer and on the "chargeable consideration" ie, the cash paid, not any "valuation".

As you are buying a share of a property in which you already own at least 25% of it, and you live there as your main home, then you will face normal rate SDLT, not the additional rate 
Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK (www.gov.uk)

is there an outstanding mortgage which your sibling is party to?

normal rate SDLT is £0 on up to £250,000 paid (cash paid + share of any o/s mortgage)- see section "unmarried couples and other joint owners" in the above link

Albermarle

Property valued at 400k, but I paid 100k for refurb

There is no rule that says you pay £100K for a refurb, and this then increases the value of the house by £100K.
It could be by more or less.
What was the value before the refurb?
Although you paid for it, did you agree with your sibling what refurb was needed, or did you just decide everything yourself?

SDLT_Geek

pumas said:

Buying out other Tenant-in-Common, a sibling.

I now live in the property, they never have.

Property valued at 400k, but I paid 100k for refurb, so 

should I pay 150k to sibling. I'm not sure this sounds right.

Is the SDLT payable, minus 125k allowance, on 150k or 200k?

I agree with the SDLT analysis by @Bookworm105 .  We are assuming the property is in England.

In the absence of a mortgage (as seems to be the case here) the "chargeable consideration" is the amount you pay your brother, say £150,000 if that is what you agree.

The 3% surcharge for additional properties seems unlikely to apply.  Perhaps because you have no other property interests, perhaps because of the rule about enlarging interests which @Bookworm105 mentions (assuming you have lived in the property throughout the last three years as your only or main residence).

The threshold for SDLT at the standard rates is presently £250,000, but is set to revert to £125,000 on 1 April 2025.

pumas

Oh dear, it seems to get more complicated!
In England. Freehold. No Mortgage. My only property which was gutted, walls stripped, ceilings down, re-wired, CH installed,  cost me near 100k- Sibling has never paid for anything 
2006  LR value 150K, 2 of us inherited, now 400K.


.....because you are siblings and therefore "connected persons", sibling's CGT is based on the market value at point of sale, not the actual price paid (to negate obvious price manipulation)
So, half market value would be 200k, and is that what they pay CGT on? (minus the 2006 half value of 75k) and obviously can't claim any relief on the 'extra'  50k


...The threshold for SDLT at the standard rates is presently £250,000, but is set to revert to £125,000 on 1 April 2025.
 But I read it that the allowance is pro rata to the share being bought, so I have skimmed through the 70+ SDLT questions.

I was trying to get my head round all the costs this sale will generate, it seemed so straightforward initially. As my sibling has done nothing and paid nothing for 20 years, I just wanted to make it simple when the first dies!

I appreciate the responses,  presumably the conveyancer can sort it out, as sale progresses. 

silvercar

just to adjust to add one more complication, the value of siblings half of the house could be less than half the market value, given that the other half is occupied (by you). So the full market value may be £400k, but the value of half, with the other half being occupied will be less, I’ve seen 15% discount as a generalised figure. 

SDLT_Geek

pumas said:

Oh dear, it seems to get more complicated!
In England. Freehold. No Mortgage. My only property which was gutted, walls stripped, ceilings down, re-wired, CH installed,  cost me near 100k- Sibling has never paid for anything 
2006  LR value 150K, 2 of us inherited, now 400K.


.....because you are siblings and therefore "connected persons", sibling's CGT is based on the market value at point of sale, not the actual price paid (to negate obvious price manipulation)
So, half market value would be 200k, and is that what they pay CGT on? (minus the 2006 half value of 75k) and obviously can't claim any relief on the 'extra'  50k


...The threshold for SDLT at the standard rates is presently £250,000, but is set to revert to £125,000 on 1 April 2025.
 But I read it that the allowance is pro rata to the share being bought, so I have skimmed through the 70+ SDLT questions.

I was trying to get my head round all the costs this sale will generate, it seemed so straightforward initially. As my sibling has done nothing and paid nothing for 20 years, I just wanted to make it simple when the first dies!

I appreciate the responses,  presumably the conveyancer can sort it out, as sale progresses. 

The SDLT bands are not pro rata to the share being bought.  If you are the only person buying a share, then your SDLT will be worked out on the price you pay, allowing for the full band at the time. 

pumas

Thank you all, I'll leave it at that for now