Stamp Duty Question

tomds87

My step father currently lives in a  property alone and has done since my mother passed away several years ago. He has since met a new partner and is looking to move in with her next year.

My two step sisters, brother and I are tenants in common on the property along with my step father. The plan being that when my step father passes away, a third will go to my brother and I and the final third would be split between my two step sisters. My step father, one of my step sisters and I are shown as the registered owners of the property on the title register. 

My wife and I are interested in selling our current house and buying my step fathers property that I am shown as a joint registered owner for outright. 
My question is, would I be required to pay stamp duty on a house I am already shown as a registered owner for albeit with two other people. My wife and I would become the sole owners and it would be our only property? 

Thanks in advance. 

Keep_pedalling

You would pay SD on the four fifths of the house of the house you don’t own. Any of the joint owners who don’t live there are also likely to have a CGT liability when you buy it.

How did the house end up being owned 5 ways? If he gifted part ownership away then the IHT 7 year rule does not come in to effect until he actually moves out. 

saajan_12

tomds87 said:

My step father currently lives in a  property alone and has done since my mother passed away several years ago. He has since met a new partner and is looking to move in with her next year.

My two step sisters, brother and I are tenants in common on the property along with my step father. The plan being that when my step father passes away, a third will go to my brother and I and the final third would be split between my two step sisters. My step father, one of my step sisters and I are shown as the registered owners of the property on the title register. 

My wife and I are interested in selling our current house and buying my step fathers property that I am shown as a joint registered owner for outright. 
My question is, would I be required to pay stamp duty on a house I am already shown as a registered owner for albeit with two other people. My wife and I would become the sole owners and it would be our only property? 

Thanks in advance. 

Its not just about whether names are added or not. There is a transfer (from multiple names to two) which is reported. The SDLT is based on the amount paid, which would presumably be the value of 5/6 of the property (if you and brother share a third, so you own 1/6). The transfer from you to {you+wife} would be free. 

As it'll be your only property, you don't owe the higher rate, just the standard rate. 

Brie

Keep_pedalling said:

You would pay SD on the four fifths of the house of the house you don’t own. Any of the joint owners who don’t live there are also likely to have a CGT liability when you buy it.

How did the house end up being owned 5 ways? If he gifted part ownership away then the IHT 7 year rule does not come in to effect until he actually moves out. 

If it's got 3 registered joint owners wouldn't the SD be paid on 2/3?  I know there's the other bit about the 5 of them but are the other 2 that are not registered actually owners in fact.  Or maybe it's just "talk" i.e. when we die you'll get this split.

tomds87

Sorry I probably haven't done a fantastic job of explaining this but I am still trying to get my head around the tennants in common part as its quite confusing. Essentially, the value of the house is split into 3, which I would inherit an entire third to myself.
I was told that my step father could sell the house and keep the money in an account. He would get the interest, but the money cannot be spent. He can however buy another home with it, but this would then be divided into 3 again on his death. I would eventually inherit a third. 

My step father wants to see if he can release some of the money to me early to come off the value of the property, but I dont know if this will be possible.

I assume I will need to seek some advice or review any paperwork he may have. I still can't work out why only my step sister and step father and I are the registered owners when my brother and other step sister are also tenants in common.  

SDLT_Geek

tomds87 said:

Sorry I probably haven't done a fantastic job of explaining this but I am still trying to get my head around the tennants in common part as its quite confusing. Essentially, the value of the house is split into 3, which I would inherit an entire third to myself.
I was told that my step father could sell the house and keep the money in an account. He would get the interest, but the money cannot be spent. He can however buy another home with it, but this would then be divided into 3 again on his death. I would eventually inherit a third. 

My step father wants to see if he can release some of the money to me early to come off the value of the property, but I dont know if this will be possible.

I assume I will need to seek some advice or review any paperwork he may have. I still can't work out why only my step sister and step father and I are the registered owners when my brother and other step sister are also tenants in common.  

It might help if you go back a bit.  Did the house used to belong to your mother, and the present ownership you describe is under the terms of her Will?

It sounds as if there is a trust under which your stepfather has a life interest (the right to live in the house for life or to the income) and there is a remainder interest divided into thirds: 1/ 3 between your two stepsisters, 1/3 for your brother and 1/3 for you.

It sounds as if the registered proprietors are you, a stepsister and your stepfather; you hold as trustees on the above terms.  

There is a legal limit of four registered proprietors.  It is common for not all of the beneficiaries to be trustees.

Keep_pedalling

tomds87 said:

Sorry I probably haven't done a fantastic job of explaining this but I am still trying to get my head around the tennants in common part as its quite confusing. Essentially, the value of the house is split into 3, which I would inherit an entire third to myself.
I was told that my step father could sell the house and keep the money in an account. He would get the interest, but the money cannot be spent. He can however buy another home with it, but this would then be divided into 3 again on his death. I would eventually inherit a third. 

My step father wants to see if he can release some of the money to me early to come off the value of the property, but I dont know if this will be possible.

I assume I will need to seek some advice or review any paperwork he may have. I still can't work out why only my step sister and step father and I are the registered owners when my brother and other step sister are also tenants in common.  

This sounds like an immediate post death interest trust created by your mother’s will. If that is the case the part not legal owned by your step father is actually owned by the trust, but your step father would be the beneficial owner of the whole house. If that is the case the then it makes a big difference as far as taxation is concerned. 

Can you let us have the exact wording of your mother’s will with regard to this bequest (redact any personal details) ? If her will did create a trust, you should not have been registered as an owner only as a trustee.