Stamp Duty additional property situation

JDi

Hi all. I have been speaking to my solicitor regarding stamp duty on housing and they have said because of my situation they advise i need to seek tax advice. I thought i would ask in here also to see if anyone can confirm my thoughts.

Live with my partner at her house, i am not on the mortgage or deeds. I have my own property that is rented out. 
We are looking to buy together with the equity from her house and a cash contibution from me. Presume we will be looking at having to pay additional rate stamp duty i believe for the full house price?

I did have a thought though that if i was put on the deeds and mortgage at her house instead the stamp duty would be lower as stamp would only be applicable on the half i was buying. At the point we then buy a bigger house i would no longer have to pay the additional rate stamp duty as i would be moving my primary residence and therefore normal stamp would apply.

Can anyone confirm whether my thoughts are correct? Looking at the figures involved i think this could save us quite a few thousand pound if im correct.

Thanks

silvercar

Either you go on the deeds on her house and then you will both be selling and buying, so not increasing the number of properties you own, therefore no additional SDLT to pay. Or you consider marriage/  a civil partnership, in which case you would acquire her ownership status of her house and therefore again won’t be increasing the number of properties you own. 

To buy into her current home, may mean consent from the mortgage lender and there may be some SDLT to pay depending on the value you buy from her and the size of the mortgage. 

Bookworm105

JDi said:

Can anyone confirm whether my thoughts are correct? 

you are correct, example 2 covers the current situation
SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

example 1 in the above covers silvercar's suggestion to get legally married and is also explained here:
SDLTM09820 - SDLT - higher rates for additional dwellings - individuals - purchasing without your spouse or civil partner - Para 9 and 9A Sch4ZA FA2003 - HMRC internal manual - GOV.UK

and not married, but legal co-owner, is the basic rule for joint purchasers
SDLTM09764 - SDLT - higher rates for additional dwellings: joint purchasers - Para 2(3) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

saajan_12

JDi said:

Hi all. I have been speaking to my solicitor regarding stamp duty on housing and they have said because of my situation they advise i need to seek tax advice. I thought i would ask in here also to see if anyone can confirm my thoughts.

Live with my partner at her house, i am not on the mortgage or deeds. I have my own property that is rented out. 
We are looking to buy together with the equity from her house and a cash contibution from me. Presume we will be looking at having to pay additional rate stamp duty i believe for the full house price?

Correct, its an additional property for you and you're not married. 

JDi said:

I did have a thought though that if i was put on the deeds and mortgage at her house instead the stamp duty would be lower as stamp would only be applicable on the half i was buying. At the point we then buy a bigger house i would no longer have to pay the additional rate stamp duty as i would be moving my primary residence and therefore normal stamp would apply.

Can anyone confirm whether my thoughts are correct? Looking at the figures involved i think this could save us quite a few thousand pound if im correct.

Thanks

Numbers - you'd be paying the full (base + additional 5%) stamp duty on half of her house. The saving is on just the additional 5% on the whole new house. Essentially it depends on the values, but your plan does have an extra lot of 'normal' stamp duty. 
Also you'd need to go onto her mortgage, which could have application fees etc. 

JDi

Thanks for the input guys, brilliant stuff.

Can anyone who knows how to run the numbers approx for me? House value 210K, girlfriends mortgage 112k left. I'm going to put it 63K and we are both happy with the house and mortgage reflecting 50/50 split/ownership.

I have a property already  so will incur higher rate SD.