Remortgage stamp duty

Missjayne

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company but has just been told Just before completion that he may have to pay stamp duty. Is this correct. It seems unfair when he is living in the house anyway. He has given his ex partner her part of the deposit less part of the fine for early exit.  

fireballpaul

Missjayne said:

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company but has just been told Just before completion that he may have to pay stamp duty. Is this correct. It seems unfair when he is living in the house anyway. He has given his ex partner her part of the deposit less part of the fine for early exit.  

I thought that stamp duty was on a 2nd home only, (which doesn't apply if you are leaving one home for another)

Hope someone here can clarify. 

Keep_pedalling

fireballpaul said:

Missjayne said:

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company but has just been told Just before completion that he may have to pay stamp duty. Is this correct. It seems unfair when he is living in the house anyway. He has given his ex partner her part of the deposit less part of the fine for early exit.  

I thought that stamp duty was on a 2nd home only, (which doesn't apply if you are leaving one home for another)

Hope someone here can clarify. 

That is the additional tax for purchasing a secondary residential property. The standard tax (SDLT if in England) still applies if buying out a joint owner. There will be none if the 50% share is below £125k.

Missjayne

Keep_pedalling said:

fireballpaul said:

Missjayne said:

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company but has just been told Just before completion that he may have to pay stamp duty. Is this correct. It seems unfair when he is living in the house anyway. He has given his ex partner her part of the deposit less part of the fine for early exit.  

I thought that stamp duty was on a 2nd home only, (which doesn't apply if you are leaving one home for another)

Hope someone here can clarify. 

That is the additional tax for purchasing a secondary residential property. The standard tax (SDLT if in England) still applies if buying out a joint owner. There will be none if the 50% share is below £125k.

So my sons ex partner only got 17k out of the property which was her deposit he will not have to pay stamp duty. His solicitor seems to think he does. Thank you 

amnblog

Missjayne said:

Keep_pedalling said:

fireballpaul said:

Missjayne said:

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company but has just been told Just before completion that he may have to pay stamp duty. Is this correct. It seems unfair when he is living in the house anyway. He has given his ex partner her part of the deposit less part of the fine for early exit.  

I thought that stamp duty was on a 2nd home only, (which doesn't apply if you are leaving one home for another)

Hope someone here can clarify. 

That is the additional tax for purchasing a secondary residential property. The standard tax (SDLT if in England) still applies if buying out a joint owner. There will be none if the 50% share is below £125k.

So my sons ex partner only got 17k out of the property which was her deposit he will not have to pay stamp duty. His solicitor seems to think he does. Thank you 

It is not about how much the former joint owner got out it is about transfer of value. What size is the mortgage?

Missjayne

If they paid stamp duty when they bought the property why should he pay stamp duty again on the same property. Just because her name is coming off the mortgage.  Also he has paid a big lump sum of the mortgage so he could get it on his own. His mortgage 260K

amnblog

Missjayne said:

If they paid stamp duty when they bought the property why should he pay stamp duty again on the same property. Just because her name is coming off the mortgage.  Also he has paid a big lump sum of the mortgage so he could get it on his own. His mortgage 260K

Because of transfer of Equity. No-one has ever suggested that taxes are 'fair'. The Solicitor would appear to be correct in this case, the bill, likely modest.

saajan_12

Missjayne said:

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company

Re the mortgage, if he transitions into a product with the same lender then they'll often waive the early exit fee. How close is he to the affordability criteria? If close, then would it help to wait a couple of months as the balance goes down and possibly his income goes up? Or could you / someone be a guarantor? 

Missjayne said:

Keep_pedalling said:

fireballpaul said:

Missjayne said:

My son and his girlfriend bought a house and the split up. She didn’t want anything to do with house just her share of the deposit . My son had to remortgage because you can’t take a persons name off the mortgage. He paid the mortgage and could do quite comfortably on his own but the mortgage company wouldn’t give him the mortgage on his own. He has had to leave that mortgage company and pay a fine for early exit.  He is going through the process of getting the mortgage with another company but has just been told Just before completion that he may have to pay stamp duty. Is this correct. It seems unfair when he is living in the house anyway. He has given his ex partner her part of the deposit less part of the fine for early exit.  

I thought that stamp duty was on a 2nd home only, (which doesn't apply if you are leaving one home for another)

Hope someone here can clarify. 

That is the additional tax for purchasing a secondary residential property. The standard tax (SDLT if in England) still applies if buying out a joint owner. There will be none if the 50% share is below £125k.

So my sons ex partner only got 17k out of the property which was her deposit he will not have to pay stamp duty. His solicitor seems to think he does. Thank you 

So mortgage 260k makes her half 130k? 
Plus 17k equity? 
Total 147k? 

He's taking over her half of the mortgage too effectively paying £147k (130k in mortgage, 17k in cash) for her share. SDLT threshold is 125k so the remainder 22k would be subject to 2% SDLT = £440. 

Missjayne

The original mortgage was £337,500 he paid her her half of the deposit 17,500k. He had to get a mortgage with another company as his mortgage company wouldn’t remortgage in just his name. He has put more money down to reduce the amount monthly payments. So his mortgage is 260k. How much stamp duty will he pay please 

grumpy_codger

I think stamp duty depends on the market value of the house (half of it if they owned it 50:50) that, generally, has nothing to do with the mortgage.

https://www.moneysavingexpert.com/mortgages/stamp-duty/

amnblog

Like grumpy_codger said:

I think stamp duty depends on the market value of the house (half of it if they owned it 50:50) that, generally, has nothing to do with the mortgage.

https://www.moneysavingexpert.com/mortgages/stamp-duty/

Like all taxation legislation it is not quite that simple.

The SDLT is interested in chargeable consideration which includes transfer of a debt (as is the case here)