Want to divorce, buy own place & stamp duty

redsaz

Both 50s, married 20, our relationship is irretrievable, we're just friends and we're not even that sometimes. We haven't had an intimate relationship for the last ten (not uncommon it seems!), we just rub along but I want to divorce now and move on.  Row several years ago and he suggested divorcing and I said no but really i should have just faced it.  We own a home between us, both named, no kids.  We both have our own jobs and pensions - I earn more (10k diff I think) but we've always paid equal share for everything through our own joint account.  We both have separate individual bank accounts also.  So from a financial perspective, I am reasonably confident we would just agree to split the house and joint bank account down the middle and not go after each others pensions - we both respect each others efforts to get to where we are but I fully appreciate once numbers are seen, that could change minds.  Neither of us could probably afford to buy each other out and to be honest, I don't want to live here in future.  We'd both have a decent deposit to buy somewhere or have a small mortgage. I'm sure his Mums and Grandma's house is in his and his siblings names but it isn't something I would contest, they belong to his family and might help counter any challenge of my pension.

I want to move out now and get my own flat and have a £50k deposit I've saved and start divorce proceedings on gov.uk, ideally together. I could put less down. My Dad always said don't move out but if neither of us are happy and want to move on then I don't see what difference it would make (and if a court agrees its in our best interests???) 

I know there is a stamp duty implication in that I'd have to pay it but I believe it could be claimed back if divorced in less than 3 years.

Does anybody have any advice on the entire situation.  I guess I am just looking for advice and reassurance for any red flags you might be able to see.  Thanks for reading this far.

DullGreyGuy

If everything is amicable and everyone is happy with the proposal then thats fine but people can have a change of heart as things progress, especially if lawyers advise them they are being short changed. 

Obviously if you buy a flat whilst still married it too will be a marital asset for consideration of division if it ultimately goes to a judge to decide who gets what. The fact you are the higher earner naturally means you're more likely to be the one owing him money by having a bigger pension etc. 

You could get a legal separation which doesn't end the marriage but does stop any future earnings/purchases be considered marital assets but they are typically reserved for those that cannot get a divorce or want to be separated but not divorced. The timeframes aren't going to be that much shorter -v- just getting the divorce and financial order done. 

MeteredOut

redsaz said:

Both 50s, married 20, our relationship is irretrievable, we're just friends and we're not even that sometimes. We haven't had an intimate relationship for the last ten (not uncommon it seems!), we just rub along but I want to divorce now and move on.  Row several years ago and he suggested divorcing and I said no but really i should have just faced it.  We own a home between us, both named, no kids.  We both have our own jobs and pensions - I earn more (10k diff I think) but we've always paid equal share for everything through our own joint account.  We both have separate individual bank accounts also.  So from a financial perspective, I am reasonably confident we would just agree to split the house and joint bank account down the middle and not go after each others pensions - we both respect each others efforts to get to where we are but I fully appreciate once numbers are seen, that could change minds.  Neither of us could probably afford to buy each other out and to be honest, I don't want to live here in future.  We'd both have a decent deposit to buy somewhere or have a small mortgage. I'm sure his Mums and Grandma's house is in his and his siblings names but it isn't something I would contest, they belong to his family and might help counter any challenge of my pension.

I want to move out now and get my own flat and have a £50k deposit I've saved and start divorce proceedings on gov.uk, ideally together. I could put less down. My Dad always said don't move out but if neither of us are happy and want to move on then I don't see what difference it would make (and if a court agrees its in our best interests???) 

I know there is a stamp duty implication in that I'd have to pay it but I believe it could be claimed back if divorced in less than 3 years.

Does anybody have any advice on the entire situation.  I guess I am just looking for advice and reassurance for any red flags you might be able to see.  Thanks for reading this far.

Re. the emboldened bit. Are you saying he already legally owns (or has rights over) a portion of his mums and grandmas house?

If not, that property that would not be included in any settlement agreement, whereas your pension would be. So, in that case, I'd disagree that is a counter, in the legal sense.

Albermarle

If everything is amicable and everyone is happy with the proposal then thats fine but people can have a change of heart as things progress, especially if lawyers advise them they are being short changed. 

Or a couple of years down the line, a new partner/family may encourage one of you to reopen all the financial arrangements, especially if they feel it was unfair.

If you have a legal financial separation officially approved by the court, then it would draw a line and could not be revisited at a later date.

Albermarle

There have been a couple of similar threads recently ( not exactly the same)
There is this one and in it I also linked to another thread.
Separating and property issues — MoneySavingExpert Forum

SDLT_Geek

Here are some thoughts on the Stamp Duty aspect.

If the property you buy is in England then the relevant stamp duty is stamp duty land tax.

If you simply go ahead and buy a property while still owning a half share in the matrimonial home, then the extra 3% SDLT would be due. It would not be repayable by virtue of you getting divorced within three years, but might well be repayable if the former matrimonial home is sold within three years.

If, rather than just going ahead and buying the property, you get further with matrimonial proceedings and get a “property adjustment order” which is for the benefit of your spouse in respect of the existing matrimonial home, and then you buy a new property after that, then the 3% extra should not be due on the purchase. 

Bookworm105

SDLT_Geek said:

Here are some thoughts on the Stamp Duty aspect.

If the property you buy is in England then the relevance stamp duty is stamp duty land tax.

If you simply go ahead and buy a property while still owning a half share in the matrimonial home, then the extra 3% SDLT would be due. It would not be repayable by virtue of you getting divorced within three years, but might well be repayable if the former matrimonial home is sold within three years.

If, rather than just going ahead and buying the property, you get further with matrimonial proceedings and get a “property adjustment order” which is for the benefit of your spouse in respect of the existing matrimonial home, and then you buy a new property after that, then the 3% extra should not be due on the purchase. 

@sdlt_geek
when does the additional rate not apply given legislation (FA 2003 sch 3 (3) d) appears to allow for additional rate exemption "in pursuance", so before the paperwork is actually in place?
Finance Act 2003 (legislation.gov.uk)

SDLT_Geek

Bookworm105 said:

SDLT_Geek said:

Here are some thoughts on the Stamp Duty aspect.

If the property you buy is in England then the relevance stamp duty is stamp duty land tax.

If you simply go ahead and buy a property while still owning a half share in the matrimonial home, then the extra 3% SDLT would be due. It would not be repayable by virtue of you getting divorced within three years, but might well be repayable if the former matrimonial home is sold within three years.

If, rather than just going ahead and buying the property, you get further with matrimonial proceedings and get a “property adjustment order” which is for the benefit of your spouse in respect of the existing matrimonial home, and then you buy a new property after that, then the 3% extra should not be due on the purchase. 

@sdlt_geek
when does the additional rate not apply given legislation (FA 2003 sch 3 (3) d) appears to allow for additional rate exemption "in pursuance", so before the paperwork is actually in place?
Finance Act 2003 (legislation.gov.uk)

The exemption in FA 2003 / Schedule 3 / para 3(d), (concerning a transaction in contemplation in divorce before all the paperwork for the divorce is in place) where it applies, is a total exemption from SDLT.  But that only applies for transactions between the parties to a marriage.  That is not the issue here.

The rule which can help a buyer escape from the 3% surcharge where they are "tied into" the ownership of another property through a property adjustment order, is at FA 2003 / Schedule 4ZA / para 9B.

Bookworm105

SDLT_Geek said:

Bookworm105 said:

SDLT_Geek said:

Here are some thoughts on the Stamp Duty aspect.

If the property you buy is in England then the relevance stamp duty is stamp duty land tax.

If you simply go ahead and buy a property while still owning a half share in the matrimonial home, then the extra 3% SDLT would be due. It would not be repayable by virtue of you getting divorced within three years, but might well be repayable if the former matrimonial home is sold within three years.

If, rather than just going ahead and buying the property, you get further with matrimonial proceedings and get a “property adjustment order” which is for the benefit of your spouse in respect of the existing matrimonial home, and then you buy a new property after that, then the 3% extra should not be due on the purchase. 

@sdlt_geek
when does the additional rate not apply given legislation (FA 2003 sch 3 (3) d) appears to allow for additional rate exemption "in pursuance", so before the paperwork is actually in place?
Finance Act 2003 (legislation.gov.uk)

The exemption in FA 2003 / Schedule 3 / para 3(d), (concerning a transaction in contemplation in divorce before all the paperwork for the divorce is in place) where it applies, is a total exemption from SDLT.  But that only applies for transactions between the parties to a marriage.  That is not the issue here.

@sdlt_geek
thanks, but still confused by your answer as the OP is married and appears to be starting the divorce stage.

SDLT_Geek

Bookworm105 said:

SDLT_Geek said:

Bookworm105 said:

SDLT_Geek said:

Here are some thoughts on the Stamp Duty aspect.

If the property you buy is in England then the relevance stamp duty is stamp duty land tax.

If you simply go ahead and buy a property while still owning a half share in the matrimonial home, then the extra 3% SDLT would be due. It would not be repayable by virtue of you getting divorced within three years, but might well be repayable if the former matrimonial home is sold within three years.

If, rather than just going ahead and buying the property, you get further with matrimonial proceedings and get a “property adjustment order” which is for the benefit of your spouse in respect of the existing matrimonial home, and then you buy a new property after that, then the 3% extra should not be due on the purchase. 

@sdlt_geek
when does the additional rate not apply given legislation (FA 2003 sch 3 (3) d) appears to allow for additional rate exemption "in pursuance", so before the paperwork is actually in place?
Finance Act 2003 (legislation.gov.uk)

The exemption in FA 2003 / Schedule 3 / para 3(d), (concerning a transaction in contemplation in divorce before all the paperwork for the divorce is in place) where it applies, is a total exemption from SDLT.  But that only applies for transactions between the parties to a marriage.  That is not the issue here.

@sdlt_geek
thanks, but still confused by your answer as the OP is married and appears to be starting the divorce stage.

Yes, this is complicated.  The scenario, as I understand it is, as you say, that OP is married and is now looking to divorce.  The matrimonial home is jointly owned and that will remain the case, as neither can buy the other out.  OP is looking to buy another property to live in.

The complete exemption in Sch3/para3 is not in point: there is not to be any transfer between the spouses.

As things stand though, when OP buys another property to live in, OP will have to pay the higher rates of SDLT (presently an extra 3%), because OP still has a share in the matrimonial home.  So OP would be buying an additional property and not meet the conditions for replacing their main residence.  My point was that if OP delays buying a new home until there is a "property adjustment order" in divorce proceedings, then OP should be able to escape the extra 3% SDLT.

Bookworm105

SDLT_Geek said:

Bookworm105 said:

SDLT_Geek said:

Bookworm105 said:

SDLT_Geek said:

Here are some thoughts on the Stamp Duty aspect.

If the property you buy is in England then the relevance stamp duty is stamp duty land tax.

If you simply go ahead and buy a property while still owning a half share in the matrimonial home, then the extra 3% SDLT would be due. It would not be repayable by virtue of you getting divorced within three years, but might well be repayable if the former matrimonial home is sold within three years.

If, rather than just going ahead and buying the property, you get further with matrimonial proceedings and get a “property adjustment order” which is for the benefit of your spouse in respect of the existing matrimonial home, and then you buy a new property after that, then the 3% extra should not be due on the purchase. 

@sdlt_geek
when does the additional rate not apply given legislation (FA 2003 sch 3 (3) d) appears to allow for additional rate exemption "in pursuance", so before the paperwork is actually in place?
Finance Act 2003 (legislation.gov.uk)

The exemption in FA 2003 / Schedule 3 / para 3(d), (concerning a transaction in contemplation in divorce before all the paperwork for the divorce is in place) where it applies, is a total exemption from SDLT.  But that only applies for transactions between the parties to a marriage.  That is not the issue here.

@sdlt_geek
thanks, but still confused by your answer as the OP is married and appears to be starting the divorce stage.

Yes, this is complicated.  The scenario, as I understand it is, as you say, that OP is married and is now looking to divorce.  The matrimonial home is jointly owned and that will remain the case, as neither can buy the other out.  OP is looking to buy another property to live in.

The complete exemption in Sch3/para3 is not in point: there is not to be any transfer between the spouses.

As things stand though, when OP buys another property to live in, OP will have to pay the higher rates of SDLT (presently an extra 3%), because OP still has a share in the matrimonial home.  So OP would be buying an additional property and not meet the conditions for replacing their main residence.  My point was that if OP delays buying a new home until there is a "property adjustment order" in divorce proceedings, then OP should be able to escape the extra 3% SDLT.

must admit I find OP's wall of text hard to follow.
OP is married to him
neither OP nor him can afford to buy each other out
it appears that OP will move out and use own cash to buy a place for herself whilst apparently remaining 50/50 owner of the martial home.

A divorce is underway, but it is unclear what the financial settlement will be in respect of her share of the house since the only mention is the throwaway comment "we would just agree to split the house.. down the middle". But how since he cannot buy out her share?

So the replacement rule will never be triggered and no "transaction" takes place in respect of the property as per opening sentence of FA 2003 sch 3 (3)?
But in the meantime they are leading up to a court order and thus surely are at the stage of "in pursuance of an agreement of the parties made in contemplation or otherwise in connection with the dissolution or annulment of the marriage"