Partner buying me out during split. Do they owe me any of the stamp duty we originally split?

Mega_Maniac

Hi,

So I'll try to keep this brief, my understanding of the situation is that I am just out the stamp duty money and have to accept that... but I wanted to check as it's a substantial amount.

- My partner contributed substantially more to the purchase of the property. (roughly £340k to my £14k). I then pay 75% of the mortgage. (She wanted to use her savings to reduce mortgage)
-We both paid an equal share of stamp duty, roughly £13k each.
- We are tenants in common and not married. Our deed of trust does not include costs of purchase in the calculations for equity share. (Fairly sure this answers my question, but as I said... just checking).
-My equity is now roughly £50k/12.5%

So when separating, she is offering me 'X' to buy me out. This obviously stings quite a bit as it represents about an £8k overall loss if I include my initial stamp duty contribution.

So - to ask the question with the obvious answer - This is something I just have to take on the chin? 

What should I do differently is there were to be a next time? Should stamp duty be split according to initial equity split?

(I'm aware that in some situations (i.e. if I had a larger share) she would be liable for stamp duty to buy me out... so that puts it in perspective a bit!)

Mark_d

She's buying your 12.5% of the property for the current market value.  If you would rather she paid your stamp duty contribution, your deposit contribution, plus the capital element of your mortgage payments...then I think you'd get a lot less than £50k.

Mega_Maniac

Mark_d said:

She's buying your 12.5% of the property for the current market value.  If you would rather she paid your stamp duty contribution, your deposit contribution, plus the capital element of your mortgage payments...then I think you'd get a lot less than £50k.

That actually isn't the case. That would add up to about £60k

Mark_d

In any case, stamp duty is a tax that's paid to the government and then it disappears.  Anyone who buys property, or part of property, pays the value of that property to the seller.  The value of the property is not directly related to the costs the buyer paid.

400ixl

No equity in stamp duty unfortunately. 

Myci85

I'm not sure why you think you should get back your share of the stamp duty paid. If she decides to sell the property no one would give her back the stamp duty she paid. It is 'lost money'. Just the same as solicitor fees you would have paid, moving costs etc. 

Mega_Maniac

Myci85 said:

I'm not sure why you think you should get back your share of the stamp duty paid. If she decides to sell the property no one would give her back the stamp duty she paid. It is 'lost money'. Just the same as solicitor fees you would have paid, moving costs etc. 

This is a fair point. Just to be clear: I don't really think I *should* get this money back. I just have an average understanding of this process and want to make sure I am not assuming things incorrectly. I had been assuming that the stamp duty is a write off, and just wanted to be sure I wasn't making a mistake. 

Bigphil1474

I think you should have paid a proportional amount of the stamp duty when the house was bought as you only bought a proportion of the property i.e. if you bought 15% of the property, pay 15% of the stamp duty. You've basically ended up paying some of their stamp duty on the initial purchase, IMO. Obviously only some of the purchase price is subject to stamp duty, and I'm not suggesting you bought the bit of the house that isn't, but a reflective proportion of SDLT would be fair, and 50/50 on any costs that are 50/50, like moving costs, solicitors fees etc.

theartfullodger

What you selling for /they buy for is up to what you BOTH agree.  Nothing stopping you demanding whatever you wish.  There are no rules!

DullGreyGuy

You own 12.5% of the property, its simply a negotiation as to what you are willing to sell it for

saajan_12

Mega_Maniac said:

Hi,

So I'll try to keep this brief, my understanding of the situation is that I am just out the stamp duty money and have to accept that... but I wanted to check as it's a substantial amount.

- My partner contributed substantially more to the purchase of the property. (roughly £340k to my £14k). I then pay 75% of the mortgage. (She wanted to use her savings to reduce mortgage)
-We both paid an equal share of stamp duty, roughly £13k each.
- We are tenants in common and not married. Our deed of trust does not include costs of purchase in the calculations for equity share. (Fairly sure this answers my question, but as I said... just checking).
-My equity is now roughly £50k/12.5%

Ok but you also have a share of the mortgage currently, which she'll take on. The total consideration is your share of the property before taking the mortgage into account, and she owes stamp duty NOW on what she's buying out. 

Mega_Maniac said:

So when separating, she is offering me 'X' to buy me out. This obviously stings quite a bit as it represents about an £8k overall loss if I include my initial stamp duty contribution.

So - to ask the question with the obvious answer - This is something I just have to take on the chin? 

What should I do differently is there were to be a next time? Should stamp duty be split according to initial equity split?

(I'm aware that in some situations (i.e. if I had a larger share) she would be liable for stamp duty to buy me out... so that puts it in perspective a bit!)

There's no firm rules.. whether you paid more stamp duty or more deposit or more moving costs, its all money so  somewhat fungible.

One argument is you both contributed £deposit + £mortgage responsibility + £moving costs + £stamp duty, in order to invest in the property. You could consider that overall % and split the property value accordingly. There will be some loss you both suffer as stamp duty is lost but equally may be some gain if property prices went up higher than the mortgage balance. 

Another argument is splitting the costs to make sure both end up in the same position, ie moved into an owned property. She'll have some stamp duty to buy you out and maybe some remortgage costs. You'll have additional moving + solicitor + stamp duty costs to end up in an owned property. So you should total and split those.