Stamp duty help

Bookworm225

katygeorge said:

SDLT_Geek said:

katygeorge said:

Hi. Yes its in the UK
its the housing association selling 

im most likely doing 25% at £70k but im trying to push things to get 40% for £110k

Thankyou

You have since explained that the property is in England. That means the relevant stamp stamp is stamp duty land tax.

You have a choice. You could elect to pay now on the full market value of the property, so that the SDLT is about £3500. That would mean there is no more SDLT to pay later should you or a successor staircase out beyond 80%.

The alternative is for SDLT to be assessed on the amount you pay now.  On the alternatives you suggest, that would mean there would be no SDLT to pay now (I would need to know the rent, to be sure) but SDLT would be due when you staircase out beyond 80% (possibly more, possibly less).

Ok thankyou. Glad to have it confirmed. Thats going to add atleast a year on to my plan sadly. Now to see what impact that that will have on a mortgage as it will make me a year over retirement. 

The calculator on the .gov website said i didnt have to pay any but then every other place ive looked said i will. Why do they make these things so confusing 

I do not think you have understood what geek says, you must make a choice ("election") at the point of your purchase. Once made, you cannot change your decision at a later date. The are 2 options:

Either you state NOW that you make a "staircasing" election. That means you wish to pay SDLT on certain steps that you purchase as you go along. However, in reality that means you only pay SDLT on the first purchase if that individual step is above the threshold. and will not pay further SDLT until you reach at least 80% ownership. (So you will not pay more SDLT between the first & and up to 79% ownership) 

That means your SDLT would be calculated on what you purchase now, which you state will be at a cost of  £70,000. Since the purchase cost threshold for SDLT starts at 125,000 that means you would pay zero tax at this time on that 25% as the cost is below the threshold.

Or you state NOW that you make a "market value" election. That means you will pay SDLT now based on the value of the entire property, not just the share you are currently purchasing. So 25% @ £70,000 makes the property worth £280,000 market value. For SDLT the first 125,000 is tax free, the next 125,000 is taxed at 2% (so  £2,500) leaving the remaining 30,000 to be taxed at 5% (1,500) and thus a total tax bill of £3.500 at this time

So you need to make a gamble, pay nothing at all now but hope that if you ever buy more than 80% of the property its value at that point in time, and the tax rules/rates at that point in time, would mean your bill at that point in time would be less than £3,500 in today's money. Your decision, choose wisely.... 

BTW tax requires precise info to give correct answers. People are not being "rude" they are simply asking for that precision from readers.
(online calculators tend not to work for shared ownership because the staircasing calculation >80% is rather complex so it is inevitable that others are different to the gov result as that one does and they don't)

katygeorge

SDLT_Geek said:

katygeorge said:

SDLT_Geek said:

katygeorge said:

Hi. Yes its in the UK
its the housing association selling 

im most likely doing 25% at £70k but im trying to push things to get 40% for £110k

Thankyou

You have since explained that the property is in England. That means the relevant stamp stamp is stamp duty land tax.

You have a choice. You could elect to pay now on the full market value of the property, so that the SDLT is about £3500. That would mean there is no more SDLT to pay later should you or a successor staircase out beyond 80%.

The alternative is for SDLT to be assessed on the amount you pay now.  On the alternatives you suggest, that would mean there would be no SDLT to pay now (I would need to know the rent, to be sure) but SDLT would be due when you staircase out beyond 80% (possibly more, possibly less).

Ok thankyou. Glad to have it confirmed. Thats going to add atleast a year on to my plan sadly. Now to see what impact that that will have on a mortgage as it will make me a year over retirement. 

The calculator on the .gov website said i didnt have to pay any but then every other place ive looked said i will. Why do they make these things so confusing 

Did you read the last paragraph of my post???

I did yes. 

The house rent it £450pcm and there is no ground rent on the development im currently looking at

I had no idea shared ownership was so confusing. The more i try and learn the more confused i get. But i think its a unattainable goal now the more i look. 

Going to speak to a specialist broker tomorrow and hopefully get enough information to be able to make a decision as to if i can even do this. Dont want to put life on hold for 2/3 years to save and then find i still cant do it. And as im 40 now if i dont get it done in the next 2/3 years im going to struggle

thankyou for all your help.  

 

Bookworm225

katygeorge said:

The house rent it £450pcm and there is no ground rent on the development im currently looking at 

great, that does not alter the situation
either pay zero now on a 70,000 purchase and gamble that if you ever own >79% you will still pay less in total than had you paid a one off £3,500 now.

the reason for asking about the rent is if it is "high" then it alters the mechanics of the SDLT calculation. At £450 it is miles away from the threshold at which that would happen

katygeorge said:

I had no idea shared ownership was so confusing. The more i try and learn the more confused i get. But i think its a unattainable goal now the more i look. 

Going to speak to a specialist broker tomorrow and hopefully get enough information to be able to make a decision as to if i can even do this. Dont want to put life on hold for 2/3 years to save and then find i still cant do it. And as im 40 now if i dont get it done in the next 2/3 years im going to struggle

it's only confusing until you read the rules and follow the examples 
Stamp Duty Land Tax: shared ownership property - GOV.UK

why is it "unattainable"?
either you have the cash to meet a deposit requirement and the income to cover a mortgage (if needed) to purchase 70,000 worth of the property,
or you don't have that money, and can't.

where does another 2/3 years come into it? The typical deposit on shared ownership is 5 - 10% of the amount paid. So will it really take you 2/3 years to save between £3,500 - 7,000 if starting from zero? At which point the cost may have increased above 70K anyway  

if you can purchase it now, then what is your plan?
At 40 years old and with a child in tow are you going to stay there and want to own more of the property or just stay with 25% and hope the rental element does not increase by more than your wages each year 

SDLT_Geek

Bookworm225 said:

katygeorge said:

The house rent it £450pcm and there is no ground rent on the development im currently looking at 

great, that does not alter the situation
either pay zero now on a 70,000 purchase and gamble that if you ever own >79% you will still pay less in total than had you paid a one off £3,500 now.

the reason for asking about the rent is if it is "high" then it alters the mechanics of the SDLT calculation. At £450 it is miles away from the threshold at which that would happen

katygeorge said:

I had no idea shared ownership was so confusing. The more i try and learn the more confused i get. But i think its a unattainable goal now the more i look. 

Going to speak to a specialist broker tomorrow and hopefully get enough information to be able to make a decision as to if i can even do this. Dont want to put life on hold for 2/3 years to save and then find i still cant do it. And as im 40 now if i dont get it done in the next 2/3 years im going to struggle

it's only confusing until you read the rules and follow the examples 
Stamp Duty Land Tax: shared ownership property - GOV.UK

why is it "unattainable"?
either you have the cash to meet a deposit requirement and the income to cover a mortgage (if needed) to purchase 70,000 worth of the property,
or you don't have that money, and can't.

where does another 2/3 years come into it? The typical deposit on shared ownership is 5 - 10% of the amount paid. So will it really take you 2/3 years to save between £3,500 - 7,000 if starting from zero? At which point the cost may have increased above 70K anyway  

if you can purchase it now, then what is your plan?
At 40 years old and with a child in tow are you going to stay there and want to own more of the property or just stay with 25% and hope the rental element does not increase by more than your wages each year 

Good points well made. 

The only additional point I would have is that SDLT on staircasing up to and including 80% does not incur SDLT. It is only when staircasing goes over 80% that a charge would be due (assuming that the election is not made to pay SDLT on market value at the time of the purchase). 

katygeorge

Bookworm225 said:

katygeorge said:

The house rent it £450pcm and there is no ground rent on the development im currently looking at 

great, that does not alter the situation
either pay zero now on a 70,000 purchase and gamble that if you ever own >79% you will still pay less in total than had you paid a one off £3,500 now.

the reason for asking about the rent is if it is "high" then it alters the mechanics of the SDLT calculation. At £450 it is miles away from the threshold at which that would happen

katygeorge said:

I had no idea shared ownership was so confusing. The more i try and learn the more confused i get. But i think its a unattainable goal now the more i look. 

Going to speak to a specialist broker tomorrow and hopefully get enough information to be able to make a decision as to if i can even do this. Dont want to put life on hold for 2/3 years to save and then find i still cant do it. And as im 40 now if i dont get it done in the next 2/3 years im going to struggle

it's only confusing until you read the rules and follow the examples 
Stamp Duty Land Tax: shared ownership property - GOV.UK

why is it "unattainable"?
either you have the cash to meet a deposit requirement and the income to cover a mortgage (if needed) to purchase 70,000 worth of the property,
or you don't have that money, and can't.

where does another 2/3 years come into it? The typical deposit on shared ownership is 5 - 10% of the amount paid. So will it really take you 2/3 years to save between £3,500 - 7,000 if starting from zero? At which point the cost may have increased above 70K anyway  

if you can purchase it now, then what is your plan?
At 40 years old and with a child in tow are you going to stay there and want to own more of the property or just stay with 25% and hope the rental element does not increase by more than your wages each year 

Its looking unattainable as its not just £7k for a deposit is it 

There are all the other cost that buying a home comes with. I was doing research so i can decide if this is even doable. 

The house in question was a example. Its a development in my village. Saw on right move. I just needed some figures to work with to try and work this all out. 

Im fully aware in 2/3 years the price will have risen. 

My hope is so try and get enough saved as currently have nothing. But i need to know realistically how much i need to save and if thats even doable in the time frame. From what i can gather i will struggle with a mortgage  if i wait to long as a 25 year term will take me past retirement age. So 3 years is the limit. 

If i manage to pull this off i hope to be able to increase my share in whatever house i get. The main focus was on retirement and on housing security. I live in a rental and after being served notice 2 years ago from a landlord who wanted to sell ive had some major anxiety about my home just being pulled out from under me again. 

I have a very small amount of income i can save right now as my youngest is 3 so i dont work full time and have nursery bills. But i wanted to try and do something proactive to better our life/future.
so yes it is going to take me 2/3 years to save this money up. Were a low income family and the cost of living is so high along with my crippling rent. 

This is all very new to me so yes ive been finding it confusing. 

Bookworm225

katygeorge said:

Its looking unattainable as its not just £7k for a deposit is it 

There are all the other cost that buying a home comes with. I was doing research so i can decide if this is even doable. 

The house in question was a example. Its a development in my village. Saw on right move. I just needed some figures to work with to try and work this all out. 

pity you didn't say that to start with, I could have saved myself a lot of typing and just given you some links to research/read.

Come back when you have some real figures and we will help you work out if you done them correctly.

katygeorge

Bookworm225 said:

katygeorge said:

Its looking unattainable as its not just £7k for a deposit is it 

There are all the other cost that buying a home comes with. I was doing research so i can decide if this is even doable. 

The house in question was a example. Its a development in my village. Saw on right move. I just needed some figures to work with to try and work this all out. 

pity you didn't say that to start with, I could have saved myself a lot of typing and just given you some links to research/read.

Come back when you have some real figures and we will help you work out if you done them correctly.

Well i am very grateful of your help. Im autistic and just needed some clarification about something i couldnt make head nor tails of on my own for some reason. Now to save every penny and see if i can get somewhere with this