Stamp duty

Wd85

Hi, 
I’m looking for advise please. I have a property which I’m wanting to sell but my parent is on the mortgage with me as they gave me the deposit for my house.

i have found a property I like but I have read I would need to pay £8,500 stamp duty (they did this when we bought my home) as my parent would still want to be on the mortgage even though it just me who lives in it. 

My question is even though my parent is on it and not living with me would I still need to pay the £8,500 on the stamp duty? 

MattMattMattUK

Wd85 said:

Hi, 
I’m looking for advise please. I have a property which I’m wanting to sell but my parent is on the mortgage with me as they gave me the deposit for my house.

i have found a property I like but I have read I would need to pay £8,500 stamp duty (they did this when we bought my home) as my parent would still want to be on the mortgage even though it just me who lives in it. 

My question is even though my parent is on it and not living with me would I still need to pay the £8,500 on the stamp duty? 

Do you mean the increased SDLT for a second home? If so, then yes.

Wd85

Possibly that. I’m not sure but thank you. 

Would I be best just to buy him out? I think it only £700 then 

Bookworm225

Wd85 said:

Possibly that. I’m not sure but thank you. 

Would I be best just to buy him out? I think it only £700 then 

ultimately SDLT is based on the ownership of the property, so as long as your parent shares the legal ownership of the property with you then the higher rate will be charged.

it is possible to get a joint borrower sole proprietor (JBSP) mortgage is where two people agree joint responsibility for mortgage repayments, but only one person is the legal owner of the property.
In that case the father's involvement would not trigger higher rate SDLT

many lenders do offer such mortgages, but I have no idea if they have a premium rate on them, do some research 

here is a random example: Nat West's "Family Backed Mortgage" 
Mortgages | Family-Backed mortgages | NatWest

Note it is vital that you understand that father cannot have any entitlement at all to a share of the property if it were sold. If he does then he is a beneficial owner, even if he is not a name on the legal ownership deeds. Beneficial ownership triggers higher rate SDLT, father may therefore be required to make a formal declaration (of trust) stating he has no financial interest in the property.

so the question is : why does father want to be on the mortgage? Is it to:
-  help you be able to borrow more
or
- because he wants to protect (benefit from) money he has put in the property: deposit and/or subsequent equity?


SDLTM09764 - SDLT - higher rates for additional dwellings: joint purchasers - Para 2(3) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

To legally avoid higher rate SDLT on the purchase father must not be a beneficial owner...
"Where an individual (who is not a spouse or civil partner of any purchaser) is one of the purchasers of a dwelling but will have absolutely no beneficial interest in the property, they will not be treated as a joint purchaser of that dwelling. This would have to be evidenced in writing. Any future entitlement to capital proceeds from the sale of the property, to income or to occupy the property would mean that they do have a beneficial interest."

GrumpyDil

Is your parent shown as an owner on the property you are selling? If so, have you considered the impact of Capital Gains Tax on that arrangement. 

RHemmings

Looking at the threads on the first page in this forum today, we are in need of @SDLT_Geek!