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Buying a second home

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mfz1
mfz1 Posts: 22 Forumite
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in House buying, renting & selling
Curious to know as couple I know are in this situation. The guy had bought his house prior to getting married the woman had lived with her parents up until then. They are now living in the same house with the house still being in the husband's name.

They now want to buy a bigger house and have the means to, the husband doesn't want to sell his existing house but wants to buy the house with the wife.

I have told them that they'll have to pay stamp duty and they can't understand why since the wife has never been a homeowner.

Am i correct in making this assumption?

Now I have been asked the question of (if i'm right) how they can avoid paying for stamp duty.

Other than maybe the wife can buy the entire house in her name? or Buying through a limited company is the only thing i can think of. Not entirely sure on the details of either two
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  • p00hsticks
    p00hsticks Posts: 12,819 Forumite
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    edited 16 April 2018 at 12:09PM
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    mfz1 wrote: »
    Am i correct in making this assumption?

    Yes you are
    mfz1 wrote: »
    Now I have been asked the question of (if i'm right) how they can avoid paying for stamp duty.

    The only way is to sell the current house.

    As they're married they're considered a single entity for this legislation, so buying in just the wifes name wouldn't help.

    Buying via a limited company wouldn't be a smart move either - for one thing a company can't have a PPR so there would be Capital Gains Tax due when the company came to sell it.
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    Buying in her name doesn't work (unless they get divorced first!) because married couples are treated as a single unit.

    Buying through a limited company doesn't work because HMRC aren't daft and have covered that off.

    They'll need to pay the additional rate or sell the first house.
  • mfz1
    mfz1 Posts: 22 Forumite
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    Good stuff, I'll tell them to get divorced, in fairness I did ask the guy are u sure you want to get married? lol!

    Single entity! how has there not been a court case for that yet ?

    Its not financially beneficial for a working couple to get married anymore is there.
  • p00hsticks
    p00hsticks Posts: 12,819 Forumite
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    mfz1 wrote: »
    Its not financially beneficial for a working couple to get married anymore is there.

    On the cotrary, there are many financial advantages to being married, but allowing a married couple to own two homes when they are only living in one would defeat the object of the additional stamp duty legislation, which is to encourage people to free up property when they move rather than hang onto them and become 'accidental' landlords
  • Slithery
    Slithery Posts: 6,046 Forumite
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    Just to make this clear, they are not only due to pay the standard stamp duty but also the additional stamp duty for multiple properties.
  • mfz1
    mfz1 Posts: 22 Forumite
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    okay I understand that you can transfer assets without having to worry about tax between each other and sharing capital gains tax. Marriage tax allowance however is only good if one person earns 11800 or less.

    I thought that the second home stamp duty would be part of it and there would be no additional?

    i.e. if you already own a house and say purchased another house for £500,000 then you'd have to pay £30,000 in stamp duty or is there something else that they need to consider?
  • p00hsticks
    p00hsticks Posts: 12,819 Forumite
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    mfz1 wrote: »
    i.e. if you already own a house and say purchased another house for £500,000 then you'd have to pay £30,000 in stamp duty or is there something else that they need to consider?

    That's it - whereas if they sold the existing property when purchasing the next, the SDLT would be £15,000 (assuming they are in England - I believe the rules may be different in Scotland and Wales)
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    edited 16 April 2018 at 9:31PM
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    Though given that most couples need (or at least want) their home to be in joint names, the additional rate of SDLT would apply whether or not they are married.
  • mfz1
    mfz1 Posts: 22 Forumite
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    Hang on wouldn't they be exempt from the first 300,000 since the wife is technically a first time buyer? Never had a property to her name.
  • noh
    noh Posts: 5,799 Forumite
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    mfz1 wrote: »
    Hang on wouldn't they be exempt from the first 300,000 since the wife is technically a first time buyer? Never had a property to her name.

    No read post #2 above.
    As they're married they're considered a single entity for this legislation, ........
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