Please help! Stamp duty and staircasing.

Sweet_tooth00

We bought our shared ownership property in 2017. We bought 40% at £136000 and paid a small portion of stamp duty,  about £300.
We are now in the position to staircase up to 100%. The property has been valued at £330000. My solicitor has told me the stamp duty is £6500 but we have already paid some stamp duty for the percentage that we own. Please help.

MeteredOut

How have they calculated the £6500? I assume you are in England (Scotland has different rates).

DE_612183

I would assume you are buying 60% of £330k - which is £198k.

First £125k is free, rest is at 2% - so 2% of ( 198 - 125 ) £73,000 = £1460.

I think they are working on the full property price.

Sweet_tooth00

MeteredOut said:

How have they calculated the £6500? I assume you are in England (Scotland has different rates).

Yes, we're in England.  I think she has calculated on the who market value but I don't think that's how you calculate it for a shared ownership property unless I'm mistaken. 

Sweet_tooth00

DE_612183 said:

I would assume you are buying 60% of £330k - which is £198k.

First £125k is free, rest is at 2% - so 2% of ( 198 - 125 ) £73,000 = £1460.

I think they are working on the full property price.

Thank you for your reply.  Is this how you work out stamp duty for shared ownership property? My solicitor seems clueless.  She has now asked me to confirm the price with HMRC but surely that is her job as she will be paying the stamp duty for us.

MeteredOut

Have you read this?

https://www.gov.uk/stamp-duty-land-tax/shared-ownership-property

SDLT if you buy more shares

If you buy any more shares in the property, you do not have to pay any more SDLT or send a return to HMRC until you own more than an 80% share.  

Once your share of the property goes over 80% you must send a return and pay SDLT on:

• the transaction that took you over 80%

• any transactions after that 

Calculating your SDLT

To work out the SDLT if you buy more shares that take you over 80%:

1. Work out the SDLT due on the total you’ve paid for the property to date - include any amounts you did not pay tax on. Use the residential rate that applies at the time you bought the new share. For example, if you’ve paid £260,000 in total so far, the total SDLT due is £3,000 (0% on the first £125,000, 2% on the second £125,000 and 5% on the final £10,000).

 

2. Divide the amount you’re paying for this share by the total amount you’ve paid for the property to date. For example, if you’re paying £65,000 for this share, divide £65,000 by £260,000 = 0.25.

 

3. Multiply the two figures, for example SDLT of £3000 multiplied by 0.25 = £750. This is the amount you would need to pay in SDLT for this share.

Interesting that no more SDLT is due until you go over 80% ownership. And is it right that you paid £136K for 40% in 2017, so 100% value was £340K, but its only worth £330K now?

You've not actually said what you're paying for the new share. Is it 60% of £330K, so £198K, so in total you'll have paid £334K for a property currently worth £330K?

Assuming so (numbers referring to instructions above)

1. Total paid to date £136K + £198K = £334K. Stamp duty due on that, 0% on £125K, 2% on £125K, 5% on £84K = £2500 + £4200 = £6700

2. £198K/£334K = 0.5928...

3. 0.5928... x 6700 = £3971.85 now due

But please do your own calcs.

MeteredOut

Sweet_tooth00 said:

MeteredOut said:

How have they calculated the £6500? I assume you are in England (Scotland has different rates).

Yes, we're in England.  I think she has calculated on the who market value but I don't think that's how you calculate it for a shared ownership property unless I'm mistaken. 

I'd be asking, not assuming.

Sweet_tooth00

Sorry, I wasn't assuming.  She has told us that she is calculating on the market value. 
Thank you for looking at this and replying.  Yes, we are paying £198000 for the 60%. It is a new build and unfortunately the value has decreased slightly. 

SDLT_Geek

Sweet_tooth00 said:

We bought our shared ownership property in 2017. We bought 40% at £136000 and paid a small portion of stamp duty,  about £300.
We are now in the position to staircase up to 100%. The property has been valued at £330000. My solicitor has told me the stamp duty is £6500 but we have already paid some stamp duty for the percentage that we own. Please help.

I agree with the calculation by @MeteredOut and get the same result, though I would round up, to give SDLT of £3,972.  To restate their calculation as I would set it out:

1. Total paid to date £136K + £198K = £334K. SDLT due on that at standard rates would be £6,700.

2. But we take a fraction of that, the fraction is £198K/£334K

3. Applying that fraction to £6,700 gives £3,972 of SDLT now due.