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    • littlebigjon
    • By littlebigjon 15th Apr 18, 11:52 AM
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    littlebigjon
    Stamp duty for multi-buyers inc. 1st time buyer
    • #1
    • 15th Apr 18, 11:52 AM
    Stamp duty for multi-buyers inc. 1st time buyer 15th Apr 18 at 11:52 AM
    We're looking to help our son buy his first house. We have our own property already, he's a first time buyer.
    The split will be approx 70k/100k for a 170k house, him/us. We don't really want to gift him all the money which would save on stamp duty, but retain an interest in the property by paying the stamp duty.
    My question is;
    What, if any, is the effect on stamp duty paid given he is a first time buyer and we are not?
Page 1
    • ACG
    • By ACG 15th Apr 18, 11:59 AM
    • 17,332 Posts
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    ACG
    • #2
    • 15th Apr 18, 11:59 AM
    • #2
    • 15th Apr 18, 11:59 AM
    You might find that the bigger issue is gifting money that is not a gift.
    If you go on the deeds, stamp duty will be chargeable.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • OUNN
    • By OUNN 15th Apr 18, 11:59 AM
    • 42 Posts
    • 67 Thanks
    OUNN
    • #3
    • 15th Apr 18, 11:59 AM
    • #3
    • 15th Apr 18, 11:59 AM
    If the property is purchased as Joint tenants or Tenants in common, the extra 3% stamp duty will be due because you already own your property.

    Will the property be purchased mortgage free? If that's the case have you considered lending him the money and putting a charge on the property?

    Would avoid the extra stamp duty I believe.
    • littlebigjon
    • By littlebigjon 15th Apr 18, 12:09 PM
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    littlebigjon
    • #4
    • 15th Apr 18, 12:09 PM
    • #4
    • 15th Apr 18, 12:09 PM
    He would have a mortgage on the property of about 70k. We wouldn't.
    • 00ec25
    • By 00ec25 15th Apr 18, 12:12 PM
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    00ec25
    • #5
    • 15th Apr 18, 12:12 PM
    • #5
    • 15th Apr 18, 12:12 PM
    if you go on the deeds you'll need to:
    a) be on the mortgage as lenders don't allow owners not party to the mortgage
    b) son will lose the FTB exemption and the whole purchase price of 170k will be liable to the higher rate SDLT because you are purchasing an additional property as co-owner with son
    c) you will be liable for capital gains tax when you/your son sells up eventually

    as others suggest, you need a different way to fund this "gift" / your investment. How do you expect to benefit from your investment? How would you get your money back seeing as it will be his home and he may not want to sell it when you want the money?

    read the guide?
    https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note

    "All the purchasers must be first time buyers."
    Last edited by 00ec25; 15-04-2018 at 12:15 PM.
    • G_M
    • By G_M 15th Apr 18, 12:30 PM
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    G_M
    • #6
    • 15th Apr 18, 12:30 PM
    • #6
    • 15th Apr 18, 12:30 PM
    Either this is a gift, or it is an investment in a property, or it is a loan. It cannot be all at once.

    1) As a gift, it is straightforward.

    * You give him the money.
    * he declares the gift to his mortgage lender
    * he buys the property in his own name as a FTB
    * he benefits from FTB reduced SDLT
    * you do not see your money again.

    2) as an investment

    * You & he jointly apply for a mortgage
    * You & he jointly buy the property
    * You and he payy the additional 3% SDLT as you are a 2nd property owner
    * When the property is sold, you declare any increase in value to HMRC and pay CGT on your share as the property is not your main residence


    3) as a loan

    * You loan him the money, with a Deed confirming the loan
    * he declares the loan to his mortgage lender
    * Many lenders will refuse to lend to him due to the financial burden on him. Use a mortgage broker to find onw who will lend
    * he buys the property in his own name as a FTB
    * he benefits from FTB reduced SDLT
    * You place a 2nd Charge on the property (asssuming the mortgage lender agreees.
    * You get back your money as per the agreement in the Deed (eg monthly payments, or when he sells)
    • littlebigjon
    • By littlebigjon 15th Apr 18, 1:55 PM
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    littlebigjon
    • #7
    • 15th Apr 18, 1:55 PM
    • #7
    • 15th Apr 18, 1:55 PM
    Thanks everyone, food for thought.
    Our main reason is to get him onto the property ladder rather than him paying out rent to a third party. We're not so interested in it as an investment, and will probably take the sensible option which is not to gift him the money (for the sake of about 6k stamp duty) and retain an interest in the property. Much as we trust him, no one can predict the future and i think we would sleep easier at night if we were joint mortgageurs.
    Thanks again
    • G_M
    • By G_M 15th Apr 18, 2:40 PM
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    G_M
    • #8
    • 15th Apr 18, 2:40 PM
    • #8
    • 15th Apr 18, 2:40 PM
    Thanks everyone, food for thought.
    Our main reason is to get him onto the property ladder rather than him paying out rent to a third party. We're not so interested in it as an investment, and will probably take the sensible option which is not to gift him the money (for the sake of about 6k stamp duty & the potential future Caapital Gains Tax) and retain an interest in the property. Much as we trust him, no one can predict the future and i think we would sleep easier at night if we were joint mortgageurs.
    Thanks again
    Originally posted by littlebigjon
    • ACG
    • By ACG 15th Apr 18, 4:22 PM
    • 17,332 Posts
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    ACG
    • #9
    • 15th Apr 18, 4:22 PM
    • #9
    • 15th Apr 18, 4:22 PM
    It is not quite as simple as G_M says.
    For example, there are lenders who will allow you to lend the deposit where it is repayable only on sale of the property - but you may find it difficult to force the sale in the future if you ever wanted to...The issue here is that I only know of one lender.

    There is also a lender who allows more on the deeds than on the mortgage - but then stamp duty is payable.

    There is also the option of doing a declaration of trust.

    But all of these routes limit your sons options for a Mortgage. It is probably not a bad idea to speak to a Mortgage broker and a solicitor.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • kingstreet
    • By kingstreet 15th Apr 18, 5:06 PM
    • 33,887 Posts
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    kingstreet
    if you go on the deeds you'll need to:
    a) be on the mortgage as lenders don't allow owners not party to the mortgage
    Originally posted by 00ec25
    There is one which allows this as it has/uses what's known as an A2 Indirect Charge.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • kingstreet
    • By kingstreet 15th Apr 18, 5:09 PM
    • 33,887 Posts
    • 18,391 Thanks
    kingstreet
    As ACG says and taking G_M's third option, let him purchase the property in his sole name and take a second charge over it to secure your "investment."

    Then there are no SDLT implications.

    There are at least two lenders who will accept this, probably more if you seek independent broker advice and they have chance to research others...
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • steampowered
    • By steampowered 15th Apr 18, 7:29 PM
    • 2,764 Posts
    • 2,691 Thanks
    steampowered
    no one can predict the future and i think we would sleep easier at night if we were joint mortgageurs.
    Thanks again
    Originally posted by littlebigjon
    Brilliant post by G_M earlier, my hats off to him.

    As G_M says, if you want an interest in the property, you will need to go on the mortgage.

    This does mean that you will be liable to make mortgage payments (all of them) if your son stops paying the mortgage for whatever reason.
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