SDLT second home

errumm

I sold my main residence >3 years ago, and have been living in my Mum's house, half of which I inherited 20 years ago.

I now want to buy a house with my girlfriend, and believe I'm liable for second home SDLT due to the inherited share and >3 years since I sold my main res.

She has a small house, no mortgage, which she plans to sell. Before we do, I'm planning to buy a £40k stake in this property, move in, and declare it as my main residence. After which we can sell and buy another together without incurring second home SDLT.

Is this a sensible strategy to remove the second home SDLT liability?

herbalme

That sounds sensible in principle, as the higher SDLT rate applies based on what you own on the day of completion. If you buy and move into your partner’s property first, so that it becomes your only property, a later joint purchase should not attract the additional rate. Given the sums involved, it would be worth getting confirmation from a solicitor or tax adviser before proceeding.

Tiglet2

Are you named on the title register of your mum's property, as you state you inherited half 20 years ago?

poseidon1

https://forums.moneysavingexpert.com/discussion/6667942/sdlt-second-home

Did you in fact inherit a legal beneficial interest in your mother' s residence ( presumably as a result of a bequest in your father's will) , or did you inherit your father's half share subject to your mother's overriding right of occupation of the house for her lifetime?

Many OPs on this and other forums, don't appear to understand the distinction but where your rights to the half share of house only take effect after mother death, then you do not in fact beneficially own a house for the purposes of 2nd property SDLT.

Suggest you review your father's will to determine the exact wording of the gift to you, since the correct legal position may mean there is no need for a complicated 2nd property SDLT avoidance strategy.

errumm

https://forums.moneysavingexpert.com/discussion/comment/81995574#Comment_81995574

The property isn't registered. Paper deeds are held by a solicitor. They've not been changed. The transfer was done as a deed of variation on my Dad's will. I have that, and it's mentioned on the deed of Probate.

errumm

https://forums.moneysavingexpert.com/discussion/comment/81995675#Comment_81995675

I have checked the will, and it doesn't mention anything about my Mum having rights to live there. Wording is as follows...

I give free of all costs of transfer all of my share and interest in equity as beneficial tenent in common in the proceeds of sale and in the net rents and profits until sale of the freehold property (property name) to my said son absolutely.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81995783#Comment_81995783

You mention the will was subsequently varied, what aspect of the will was varied?

As originally drafted your father's will gave your mother no security against a forced sale of the property, or legal charge against her home if you ran into financial difficulties or later divorce.

Did the deed of variation attempt to redress that, or was it your father's intent that she have no protection against potential later events that might affect your ability to retain your half share of the home?

SDLT_Geek

https://forums.moneysavingexpert.com/discussion/6667942/sdlt-second-home

For someone to live in a property as their own or main residence (as needed for the rules to work well for you) requires that the occupy with a "sufficient degree of permanence and expectation of continuity". That could be lacking on the facts you mention, of moving into a property about to be sold, in order to gain a tax advantage.

Although there is an ability to make an election for capital gains tax purposes over which of two properties one occupies is one's main residence, that ability does not exist for SDLT.

Perhaps another thing to look at is whether your mum, or another family member, could afford to buy you out of the inherited share in your mother's house (if indeed you do have a share as a tenant in common without your mother having a prior right to live in the property for life).

errumm

https://forums.moneysavingexpert.com/discussion/comment/81996328#Comment_81996328

The deed of variation was used to set up a trust that used up his nil rate band. The property transfer was in the original will. There is no reference to it in the variation. I got this wrong in my earlier reply. Apologies for that.

I'm sure it wasn't my Dad's intention to leave Mum so exposed to a forced sale, but it does seem like that is the case.

https://forums.moneysavingexpert.com/discussion/comment/81996511#Comment_81996511

How do I show a "sufficient degree of permanence and expectation of continuity"? Is there a certain amount of time we would need to live there before selling it?

As per the previous reply, it seems that Mum has no right to live in it for life, and she, nor any other family member has the means to buy my half share.

poseidon1

If the deed of variation was used to create a nil rate band trust, what was the nature of the assets utilised to fund the trust?

In the absence of significant liquid assets passing into such a trust, It was fairly common for a share of the matrimonial home to made the primary trust asset.

By the way was the trust a discretionary trust with both your mother and yourself as discretionary beneficiaries?

errumm

https://forums.moneysavingexpert.com/discussion/comment/81998334#Comment_81998334

The trust asset is cash. It is discretionary with both myself and Mum as beneficiaries.