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Second property and stamp duty question

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24

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  • SDLT_Geek
    SDLT_Geek Posts: 2,504 Forumite
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    We need to go back to basics here. Your first post suggests that although the first property is registered in the name of you and your brother, you have no interest in it. You suggest that you had agreed that you would transfer it into his sole name on request.


    So did you have a share in the property, or were you just a "bare trustee" / "nominee" holding for your brother who was wholly entitled to the property?


    If you had a share in the property then:
    (a) You cannot be a "first time buyer" for the purposes of the SDLT relief (however small your share was).
    (b) The 3% surcharge could apply if your share is worth £40K or more.


    If you had no share in the property then:
    (a) Perhaps you are still a first time buyer.
    (b) The 3% surcharge should not be in issue.


    Here are the kind of things to look out for on the question of whether you have an underlying share in the property held in the joint names of you and your brother:


    1. Is there a declaration of trust setting it out?


    2. Did you both put in capital?


    3. If there was a mortgage, what was the lender told? Who has paid the mortgage?


    4. Would there have been a reason for it going into joint names but your brother being the sole owner?


    5. Who was entitled to live in the property or receive rent from it?


    6. Would you have been entitled to a share of the sale proceeds if it had gone up in value and was sold?


    7. If it was bought since 1 December 2003, whose name was put on the land transaction return as the "purchaser"?
  • bikeman17
    bikeman17 Posts: 233 Forumite
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    Property 1 which is on let was only owned by me. No shares from anyone else. We both owned the property together at once then I had it in my name and now wish to give him it back. I have no interest or shares in this property that I would like to keep.

    Now where do I stand.
    Happy to speak on the phone to clear this matter.
  • SDLT_Geek
    SDLT_Geek Posts: 2,504 Forumite
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    Is Property 1 free of mortgage?

    Did you ever live in it or has it always been rented out?
  • bikeman17
    bikeman17 Posts: 233 Forumite
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    Property 1 is mortgaged, never lived in it and always rented out, never has been my home.
  • SDLT_Geek
    SDLT_Geek Posts: 2,504 Forumite
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    What is the amount of the mortgage debt at the moment? It is relevant as your brother will need to pay SDLT on that amount.

    Does your brother have other property interests?

    Did you pay SDLT when it went from joint ownership to your sole ownership?

    Are you expecting your brother to give it back to you later?
  • bikeman17
    bikeman17 Posts: 233 Forumite
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    What is the amount of the mortgage debt at the moment? It is relevant as your brother will need to pay SDLT on that amount. 129k, I don't think there is SDLT on this transfer

    Does your brother have other property interests? yes

    Did you pay SDLT when it went from joint ownership to your sole ownership? no

    Are you expecting your brother to give it back to you later? no
  • SDLT_Geek
    SDLT_Geek Posts: 2,504 Forumite
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    It sounds to me that your brother is going to have to pay SDLT at the higher rates on £129k. That comes to £3,950.

    You should review your acquisition from him and make a late return if a return should have been made at the time.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    edited 7 May 2018 at 5:18PM
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    bikeman17 wrote: »
    I think there is some confusion with the FTB Stamp duty and higher rate tamp duty.

    Based on my scenario and according to the flow chart, correct me if I'm wrong,
    yes you are wrong. As I explained in post #8
    bikeman17 wrote: »
    What is the amount of the mortgage debt at the moment? It is relevant as your brother will need to pay SDLT on that amount. 129k, I don't think there is SDLT on this transfer wrong. Your brother is taking sole ownership of a property which has an outstanding mortagge on it. The value of the outstanding mortgage is "chargeable consideration" for SDLT purposes so he has to pay SDLT as he is the person who will end up as the new owner.

    the way to avoid that would be for you to pay off the mortgage entirely so there is no outstanding loan on the property at the point that ownership changes from you to brother.

    Obviously if your brother pays ("gives") you any money at all towards paying off the mortgage then he is buying the property from you and he will have to pay higher rate SDLT

    Does your brother have other property interests? yes so your brother will be liable to the higher rate SDLT since he does not currently own any share of the let property, he will then own it 100% and he already owns other property so it will be an additional property for hi, , hence he pays the higher rate

    Did you pay SDLT when it went from joint ownership to your sole ownership? no

    Are you expecting your brother to give it back to you later? no
    see above, you are the one who is confused. Please read the answers carefully as both you and your brother need to plan the tax position since both of you have taxes to pay
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    bikeman17 wrote: »
    Scenario 1:
    I give away my share of property 1, and have no property. Property 2 purchase is now ready to complete, what SDLT will i need to pay?
    post #8
    standard rate SDLT
    bikeman17 wrote: »
    Scenario 2:
    Property 1 is on let and paperwork in process to transfer over to my siblings. Property 2 will be my main home of residence. What SDLT will I need to pay at this stage?
    post #8
    higher rate SDLT because property 2 is being purchased before the disposal of property 1 completes.
  • capital0ne
    capital0ne Posts: 872 Forumite
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    I wouldn't trust any answer given here. Go and see a solicitor or a taxation specialist who is experienced in second property ownership and CGT - it will cost you but could save you a considerable amount in the long run
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