Ways of reducing the stamp duty?

tloz123

Hi guys.
I currently own a property (26 years remaining on the mortgage). I currently have a consent to let on it at the moment.
That was before I got married.

I am now married. My wife is a first time buyer. We are looking into purchasing a property together but I didn’t realise how hefty the Stamp Duty would be.

Our budget is 450k. 

Based on that, the stamp duty if we were to just simply put both of our names on the deed and mortgage, would be £35k. 

I’m wondering if the stamp duty would be reduced if we do any of the following:
- I transfer my current property and the mortgage to her. I then buy the property we’re looking at with me as the sole owner and sole name on the mortgage (I’m told I’ll be able to get a mortgage with just my salary alone)
- We do a sole proprietor joint mortgage on the house we’re looking to buy.
- Sell my current house and buy one together.
- Transfer my current property to my mum but keep me in the mortgage, and then buy the other property with my wife.

Is there anything I could do to reduce the tax bill?

user1977

The only sensible option is to sell your existing property. The others either don't work because mortgage lenders won't cooperate, or fail because your spouse will be deemed to have a beneficial interest even if she's not an owner on paper (and the SDLT rules catch "other" properties owned by a spouse anyway).

housebuyer143

I suppose you could put the rental in a limited company but that has it's own costs. 
Aside from that, selling it prior to buying a new one is the way to reduce it. 

theartfullodger

Buy a cheaper house: Obvs.

saajan_12

tloz123 said:

Hi guys.
I currently own a property (26 years remaining on the mortgage). I currently have a consent to let on it at the moment.
That was before I got married.

I am now married. My wife is a first time buyer. We are looking into purchasing a property together but I didn’t realise how hefty the Stamp Duty would be.

Our budget is 450k. 

Based on that, the stamp duty if we were to just simply put both of our names on the deed and mortgage, would be £35k. 

I’m wondering if the stamp duty would be reduced if we do any of the following:
a) I transfer my current property and the mortgage to her. I then buy the property we’re looking at with me as the sole owner and sole name on the mortgage (I’m told I’ll be able to get a mortgage with just my salary alone) 
b) We do a sole proprietor joint mortgage on the house we’re looking to buy.
c) Sell my current house and buy one together.
d) Transfer my current property to my mum but keep me in the mortgage, and then buy the other property with my wife.

Is there anything I could do to reduce the tax bill?

a) No. The new property will still be the 2nd property for you as a married couple, so you'd still incur the higher rate stamp duty. You could actually also incur MORE stamp duty on the 1st property if the outstanding mortgage is high enough. 

b) No. The new property will still be the 2nd property for you as a married couple, so you'd still incur the higher rate stamp duty. 

c) Yes. Sell first and the SDLT will drop to 12.5k. 

d) No, its based on beneficial interest so if you remain on the mortgage you'll be seen to still effectively own the property, so the new property is a 2nd property for the couple, so higher rate SDLT. 

p00hsticks

Also think that d) may possibly involve some CGT having to be paid ?

Bookworm225

p00hsticks said:

Also think that d) may possibly involve some CGT having to be paid ?

since the property appears to be now let that is correct, CGT would be triggered on transfer (using current market value as it involves a "connected person" - mother!)

Grumpy_chap

The only detail the OP does not seem to have advised is where the OP and wife live presently.

The wife is FTB.
The OP has a BTL.
Do they currently live in a property that is rented, or in a property that is owned (albeit with mortgage) by the OP?
If they currently live in a property that is owned by the OP, then selling and buying will be exempt from additional SDLT under PPR rules, despite the OP also owning the BTL.

tloz123

Bookworm225 said:

p00hsticks said:

Also think that d) may possibly involve some CGT having to be paid ?

since the property appears to be now let that is correct, CGT would be triggered on transfer (using current market value as it involves a "connected person" - mother!)

Ah interesting. So HMRC defines “connected person” as family?

tloz123

Grumpy_chap said:

The only detail the OP does not seem to have advised is where the OP and wife live presently.

The wife is FTB.
The OP has a BTL.
Do they currently live in a property that is rented, or in a property that is owned (albeit with mortgage) by the OP?
If they currently live in a property that is owned by the OP, then selling and buying will be exempt from additional SDLT under PPR rules, despite the OP also owning the BTL.

Currently living in a rented flat at the moment.

tloz123

saajan_12 said:. 

d) No, its based on beneficial interest so if you remain on the mortgage you'll be seen to still effectively own the property, so the new property is a 2nd property for the couple, so higher rate SDLT. 

But what if I have a deed of trust to explicitly show that I don’t want anything from my current property? I.e. not showing financial interest