Shared ownership & staircasing assistance!

Samo1029

Good morning all, new here and have read a fair few posts in regard to staircasing stamp duty! I think I may have got my maths correct but not 100% and its driving me round the bend so a little confirmation would be massively helpful!

I bought my property at a 50% share for £112475 in 2021 during the covid Stamp duty break! I am now looking to staircase to 100%. However I am a bit confused how it will all work.

I paid zero stamp duty in 2021 (obviously) and will be purchasing the remaining 50% for £140000. Market value currently £300000.

Is there anybody that can help me figure out what stamp duty i will have to pay? The property was a resale shared ownership property.

If I have missed anything I will get back on ASAP

Thanks to you all fantastic people

always_learning22

From how I understand it, because you bought a resale shared ownership property and only owned 50% initially, stamp duty is usually assessed on the additional share you’re buying now rather than the full market value.

So in your case, the £140,000 for the remaining 50% is the key figure. If that portion sits within the current thresholds, you may still end up paying little or no stamp duty, but it depends on your status and any reliefs at the time.I’d personally double check with a solicitor or even HMRC guidance just to be certain, as staircasing rules can be a bit nuanced.

Samo1029

Thanks for that, its just so frustrating there is t anything definitive online

Tony_H_3

This was the information on the form I received in 2019…… (unformatted, it is what it is :) ) "If the property was £300k or less your solicitor should have advised you to pay 100% duty on FMV at a rate of ZERO" but have a read below, at least you'll be able to work your situation.

On the purchase of a new build shared ownership property SDLT can be paid in one of two ways.
It can either be based on the full market value of the property or alternatively based on the
premium being paid for the share, together with further duty payable on the specified rent. If you
are a first time buyer, then this may also affect the options open to you.
The “standard rate” of SDLT referred to in these notes are 0% on the first £125,000, 2% on the
next £125,000, 5% on the next £675,000 and 10% on the next £575,000.
Below we set out the different options in different circumstances:
Full Market Value less than £125,000.00
Although there are theoretically two options, there is only one sensible way on which to elect to pay
duty in this situation. You must elect to pay duty based on the full market value of the property. As
this is less than £125,000.00 the duty payable is nil and no duty will be payable on the rent either.
Also, no further duty is payable in the future if you subsequently staircase.
Full Market Value between £125,000.00 and £300,000.00
If you are a first time buyer the position is as above, because you can take advantage of the First
Time Buyer Relief and claim an exemption from SDLT meaning that you opt to tax the basis of the
full market value (which means that you pay nothing further when you staircase) and in fact pay no
duty at all.
(Note: to qualify you must not have owned or part-owned a residential property at any time
previously anywhere in the world, and in the case of joint buyers this must apply to both)
If you are not a first time buyer then you cannot use the exemption and the following rules apply
instead:
If you elect to pay on the full market value then duty is payable at the standard rates with no further
duty payable on the rent element. Also, if you staircase in the future, no further tax payment will be
due no matter what price you are paying for the further share.
Alternatively, duty can be paid on the share only. If you are paying less than £125,000.00 for your
share then the SDLT payable at this time on the premium will be Nil, whereas if you are paying
more than £125,000.00 for your share you would pay duty at standard rates on the amount of the
premium in the usual way. If you elect to pay stamp duty in this way, further duty may become
payable in the future when you staircase (see below).
If you elect to pay your SDLT at this stage based on the value of your share, then irrespective of
whether any duty is actually payable on the premium, there may still be some duty payable on the
rent element. The calculation of the duty on the rent element is extremely complex and we do this
using the stamp duty calculator tool on the Inland Revenue’s website. The SDLT figure we quote
on the reply slip attached incorporates the duty payable on the rent, if applicable.
23/11/17
Full Market value between £300,000.00 and £500,000
If you are a first time buyer you can elect to pay on the full market value (which exempts you from
any future duty on staircasing) at a reduced rate claiming the First Time Buyer Relief – the amount
of tax payable will be 5% of the amount by which the value exceeds £300,000, with no tax being
payable on the rent element. Alternatively you can pay SDLT on the premium payable for your
share and the rent, as described above (with further duty becoming payable on staircasing) and
the amounts payable on each element are calculated at a reduced rate because of the relief that is
available to you.
If you are not a first time buyer you can elect to pay either on the premium and rent as described
above (with further duty becoming payable on staircasing) or on the full market value at standard
rates (with no further duty being payable on staircasing and no duty payable in relation to the rent
element).
Full Market value above £500,000
The First Time Buyer relief does not apply, so all buyers have the choice of paying at standard
rates either on the share (premium and rent as previously described) or on the full market value.
Again, please note that if you pay tax on the share only, further duty may become payable in the
event of future staircasing as described below.
What Duty is payable in my case?

• If you pay the SDLT based on the full market value, the cost upon completion will be £1900
  or if you are a first time buyer it would be £0

If you pay the SDLT based on the premium being paid for the share you are purchasing
and on the specified rent, the cost upon completion will be £0
Please be aware that if you decide on the second option, further duty may be payable upon final
staircasing as described above. The total amount of duty you end up paying could therefore be
considerably more than if you had elected to pay on the full market value at this stage, although
(depending on values and circumstances) it could work out to be less.
Important Information about First Time Buyer Relief
Please read carefully
If you are a first time buyer, then as the full market value is less than £300,000.00 you can pay Nil
duty on the full value and also be exempt from further duty in the future should you staircase.
Please therefore ensure that if you qualify for the relief you tick this box on the Reply Slip.
Please complete the reply slip attached, indicating your choice, and return to me as soon as
possible.
23/11/17
Duty payable on Staircasing transactions
No SDLT is payable in respect of any intermediate staircasing transaction e.g. staircasing from
25% to 50%.
If duty was paid on the purchase of the initial share on the full market value basis, no further duty is
payable on staircasing irrespective of the value of the premium being paid for the final share. A
relief is claimed on the SDLT form.
If duty was paid on the premium and rent when the lease was taken out then further duty is
payable on “Final Staircasing”, which is defined as any Staircasing transaction which takes the
percentage owned to 80% or more.
The duty is calculated by taking the premium paid for the initial share and adding it to the premium
paid for the final share and any premiums previously paid on intermediate staircasing. The
combined total is then used to calculate the duty payable on the combined price at the standard
rates previously set out. The amount actually payable at that time is a proportion of the tax so
calculated, based on the proportion that the taxable consideration bears to the total consideration.
For example:
Assume an initial purchase of a 40% share for £80,000 when the full value of the property was
£200,000. Tax on the full value would have been £1,500 (2% of £75,000) in which case there
would be no duty to pay on final staircasing. If this election was not made and the buyer chose to
pay nothing on the premium at the time of the initial grant of the lease (because it was less than
£125,000) then a calculation would have to be made in the event of final staircasing to ascertain
the duty payable at that time.
Assume that at the time of final staircasing the property was worth £300,000, the price payable for
the remaining 60% would be £180,000. The total consideration paid is £260,000 (i.e. £80,000 +
£180,000) and duty on this would be £3,000 (£125,000 at 0%, next £125,000 at 2% and final
£10,000 at 5%). Only £2,077 is however payable, being the proportion of the total tax that reflects
the proportion of the overall price that was paid at the time of staircasing (£3,000 apportioned
180:260). We will be able to explain this in more detail in the event that you staircase.
Note: there may have been duty payable on the rent element at the time of the initial purchase but
this aspect is ignored when calculating the duty payable on a staircasing transaction.

SDLT_Geek

https://forums.moneysavingexpert.com/discussion/6664222/shared-ownership-staircasing-assistance

Is the property in England, so that the relevant stamp duty is stamp duty land tax? I will assume so in what follows.

Given that your purchase of the property was on a resale, the staircasing transaction with the social landlord cannot be linked for SDLT purposes to your purchase from the previous lessee. At standard rates of SDLT, the SDLT on chargeable consideration of £140,000 would be £300.

The SDLT would be zero if, when the lease was first granted, the then lessee elected to pay SDLT on the full market value. However, that would take some looking into, so you might be better off accepting that the £300 is due.