Purchasing a new home to avoid additional SDLT

singhjj

Hi my partner is in the process of buying her first home and will be lending her most of the money for it (no mortgage). Would I have to gift her the money to avoid 5% additional stamp duty or can I just lend it to her?

I will also be living in the property and we are not married. 

user1977

Not really a “gift” if you’re expecting to live there. Either way it sounds like you’ll have a beneficial interest in the property, in which case the 5% would still be due.

Bookworm225

you need to get up to speed with the definition of beneficial interest as you look to have one and that triggers higher rate for the entire purchase cost (not just your share) if it is an additional property for you

Beneficial Interest in Property: The Basics - Britton and Time Solicitors 


SDLTM09785 - SDLT - higher rates for additional dwellings: Condition C - further information - HMRC internal manual - GOV.UK
Any entitlement to capital proceeds from the sale of the property, to income or to occupy the property would likely mean that they do have a beneficial interest.

There are ways around it, get paid for legal advice to find them

RHemmings

It seems that half my posts today are of this form, but: Paging @SDLT_Geek

SDLT_Geek

singhjj said:

Hi my partner is in the process of buying her first home and will be lending her most of the money for it (no mortgage). Would I have to gift her the money to avoid 5% additional stamp duty or can I just lend it to her?

I will also be living in the property and we are not married. 

It sounds as if OP has another property (given the reference to the extra 5% SDLT).  Is that right?

It is a matter of how the financial arrangements are documented and the underlying reality which is important for SDLT.  If the partner is to be the outright owner of the property she is buying and can choose who to permit to live there, then she should be treated as the only "purchaser" for SDLT purposes.  The funds advanced should be clearly documented, as a loan (secured or unsecured) or as a gift, or as a combination.

If OP and the partner are married or civil partners, then the partner's purchase would anyway be judged for 5% surcharge purposes as if OP was a buyer.

If there is an arrangement for the property to end up owned by OP and the partner, then anti-avoidance rules could come into play.

saajan_12

singhjj said:

Hi my partner is in the process of buying her first home and will be lending her most of the money for it (no mortgage). Would I have to gift her the money to avoid 5% additional stamp duty or can I just lend it to her?

I will also be living in the property and we are not married. 

Lending would probably be preferable (and the honest answer), especially if you expect the money back. 

If you're expecting to live there in return for the gift, or expecting her to give you some money from teh sale proceeds, then that's precisely a beneficial interest and 5% sdlt due. 

If on the other hand, you're lending her the money, signed agreement that whatever happens, she'll pay you that money back, regardless of whether you live there or not and regardless of what happens to the property value, then its probably just that, ie a loan not a joint purchase.