Second home and divorce

money11111

I am hoping someone csn point me in the right direction. A local solicitor said they didn't know, so starting to feel a bit stuck.

Going through divorce which is amicable. We own a main home together, which will be split 50/50 equity when we sell it. We also have a second property we used to rent, but it's recently become empty. We had planned for ex to live there while we sorted things, but mortgage advisor said not to do that as it would then main it a residence meaning when we come to sell our main home, we would then both be liable for 2nd home stamp duty on the homes we separately buy. Bear with me...

So the flat is still empty. Mortgage advisor said easiest solution for us would be to sell the flat so it's not an extra complication. We did consider this as it's not really made us and money over the years. But we then wondered if we could take one person off the main home title deeds, and put them as the only owner of the flat (taking the other person off the flat title/deeds). That way we then both only own one property and won't be liable for second home (capital gains not relevant as flat has barely increased in value). 

I just don't know where to go for seemingly specialist advice. Anyone know? Thanks.

SDLT_Geek

money11111 said:

I am hoping someone csn point me in the right direction. A local solicitor said they didn't know, so starting to feel a bit stuck.

Going through divorce which is amicable. We own a main home together, which will be split 50/50 equity when we sell it. We also have a second property we used to rent, but it's recently become empty. We had planned for ex to live there while we sorted things, but mortgage advisor said not to do that as it would then main it a residence meaning when we come to sell our main home, we would then both be liable for 2nd home stamp duty on the homes we separately buy. Bear with me...

So the flat is still empty. Mortgage advisor said easiest solution for us would be to sell the flat so it's not an extra complication. We did consider this as it's not really made us and money over the years. But we then wondered if we could take one person off the main home title deeds, and put them as the only owner of the flat (taking the other person off the flat title/deeds). That way we then both only own one property and won't be liable for second home (capital gains not relevant as flat has barely increased in value). 

I just don't know where to go for seemingly specialist advice. Anyone know? Thanks.

Would you both be buying in England, so the relevant stamp duty is stamp duty land tax?

I will assume that, and look at two different scenarios

You sell the former matrimonial home and each afterwards buy a replacement home to live in

The extra 5% SDLT will not be due on either purchase if you both complete purchases within three years of the sale of the FMH. 

It does not matter if you still own the second property.

Nor does it matter if the second property temporarily became the main residence of one of you, so long as the ownership shares in it do not change.

This can be worked out from the guidance here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

You divide the two properties you own, so you have one each

If you "partition" the two properties you jointly own, so you own one each, then that should not attract SDLT if done as part of the divorce arrangements.

Are you saying that you would each then live long term in one?  Or would each then sell their property and buy another?  It looks as if either of you, owning just one property, sold it and bought another, then the extra 5% should not apply, given that you are getting divorced.

Albermarle

As a more general point, it is normally advised to get a legal financial final agreement as part of a divorce ( whether amicable or not).
Ad hoc arrangements like you seem to be making, can bring problems down the line, especially if new spouses/families come on the scene.

This recent thread was on the Pensions forum. It is a different situation than yours, but some of the comments could be of interest.
Ex Wife Pension claim — MoneySavingExpert Forum