Divorce, Stamp duty and house buying

Fridgebuster

I need some much needed advice.

We are splitting up. A couple, we own a property between us, both on the title.

Neither of us can afford to buy the other out. So as our children are 15+, we have decided for their stability, my wife will stay in the family home until they leave home.

In the meantime, we have got a mortgage together to buy another house that I will live in. We are both to be named on the title.

We ran into the stamp duty problem and agreed to pay it, as it looked like we could claim it back by divorcing, or seperating legally.

The plan is to sell the main house when the kids leave home, work out how much the 2nd house was worth and split the lot.

Are we doing this correctly? Any advice needed please. 

The conveyancing solicitor has said we can only claim back the stamp duty if we sell our main home in under 3 years. Which we might not want to do.

It seems both of us being on the titles of both properties are causing the issues?

Albermarle

Have you got a legal written agreement with your wife on all these arrangements ?
Normally when divorcing a comprehensive legal financial separation agreement is endorsed by the court, that covers everything, including homes, savings, child support, pensions etc . It draws a firm line under the past.
Doing it in an adhoc way by just sorting your homes out, could mean a lot of ongoing disagreements in future, especially if either of you find a new partner/family in future, who may have other ideas.
I would be more worried about arrangements potentially unravelling, rather than how much stamp duty I was paying. 

RHemmings

Albermarle said:

Have you got a legal written agreement with your wife on all these arrangements ?
Normally when divorcing a comprehensive legal financial separation agreement is endorsed by the court, that covers everything, including homes, savings, child support, pensions etc . It draws a firm line under the past.
Doing it in an adhoc way by just sorting your homes out, could mean a lot of ongoing disagreements in future, especially if either of you find a new partner/family in future, who may have other ideas.
I would be more worried about arrangements potentially unravelling, rather than how much stamp duty I was paying. 

Agreed. There needs to be a formal legal agreement.

Another potential problem is if either of you run into financial problems and can't pay your half of the mortgage. That could happen even if there isn't a disagreement between you. 

badmemory

I do hope the agreement is not "until they leave home".  My DS is in his 40s & still lives at home, this is not a problem for me but it may well be for you.

SDLT_Geek

Fridgebuster said:

I need some much needed advice.

We are splitting up. A couple, we own a property between us, both on the title.

Neither of us can afford to buy the other out. So as our children are 15+, we have decided for their stability, my wife will stay in the family home until they leave home.

In the meantime, we have got a mortgage together to buy another house that I will live in. We are both to be named on the title.

We ran into the stamp duty problem and agreed to pay it, as it looked like we could claim it back by divorcing, or seperating legally.

The plan is to sell the main house when the kids leave home, work out how much the 2nd house was worth and split the lot.

Are we doing this correctly? Any advice needed please. 

The conveyancing solicitor has said we can only claim back the stamp duty if we sell our main home in under 3 years. Which we might not want to do.

It seems both of us being on the titles of both properties are causing the issues?

Is the house you would buy together for you to live in, in England?  So the relevant stamp duty is Stamp Duty Land Tax?

If so then there is a problem with your proposed structure.  With both of you as owners of the house you are buying, but your ex not intending to live in the property, it would not be possible to recover the extra SDLT (currently 3%) if and when the former family home is sold.

What would work better for SDLT is for you to get a "property adjustment order" for the current family home and for the new property to be bought by you alone.  That might not be practical though.

MeteredOut

badmemory said:

I do hope the agreement is not "until they leave home".  My DS is in his 40s & still lives at home, this is not a problem for me but it may well be for you.

I recall a post on these boards recently where a couple had exactly "until the kids leave home" written into their divorce agreement, but with the adult child still at home, one of the parents still lived in the former marital home for a lot longer than the other envisaged.

OP, definitely get a formal legal agreement.

Albermarle

MeteredOut said:

badmemory said:

I do hope the agreement is not "until they leave home".  My DS is in his 40s & still lives at home, this is not a problem for me but it may well be for you.

I recall a post on these boards recently where a couple had exactly "until the kinds leave home" written into their divorce agreement, but with the adult child still at home, one of the parents still lived in the former marital home for a lot longer than the other envisaged.

OP, definitely get a formal legal agreement.

I have a friend in a slightly similar situation.
I know its not easy for them, or the OP, but in the long run it is much better to get divorced and get a full legal agreement about everything financial, not just the family home. It is the only real way to move on.

Fridgebuster

SDLT_Geek said:

Fridgebuster said:

Is the house you would buy together for you to live in, in England?  So the relevant stamp duty is Stamp Duty Land Tax?

If so then there is a problem with your proposed structure.  With both of you as owners of the house you are buying, but your ex not intending to live in the property, it would not be possible to recover the extra SDLT (currently 3%) if and when the former family home is sold.

What would work better for SDLT is for you to get a "property adjustment order" for the current family home and for the new property to be bought by you alone.  That might not be practical though.

Its not practical for me to buy alone. But if we are both on the mortgage, can only I be on the title?

So, if we get a property adjustment order. I have just been reading about them. And we have to be going through divorce to have one.
Can we then claim back SDLT at a later date?

We are seeing the conveyancing solicitor later, but they haven't been much help. And we don't want to spend a fortune on solicitors to sort this all out. 

Fridgebuster

We can only have the new house in both of our names.

It looks like we are going to have to swallow the 6.5k SDLT.