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  • FIRST POST
    • n15h
    • By n15h 15th May 18, 10:27 AM
    • 135Posts
    • 5,391Thanks
    n15h
    Would I Be Classed as FTB for Stamp Duty?
    • #1
    • 15th May 18, 10:27 AM
    Would I Be Classed as FTB for Stamp Duty? 15th May 18 at 10:27 AM
    Hi, looking for some advice for the below. Any help is much appreciated.

    I am a FTB, currently privately renting and currently in the process of purchasing my first house for £200K (mortgage offer received and deed signed). Stamp duty is calculated to be £1500 but I would currently be exempt from paying this.

    My parents currently own a 2 storey commercial property in Bedford (shop on ground floor, flat upstairs), and want to add my name to the property alongside theirs. I've given some context below as to why they want to do this ASAP.

    My question is: if my name is added to the commercial property, would I be liable to pay SD on my first house?


    CONTEXT
    My parents currently reside overseas (let's call that Country A), but own the 2 storey commercial property in Bedford before they moved overseas. A new amnesty program has been introduced in Country A which require any residents to declare any foreign income earned and will grant a tax amnesty to Country A residents on all taxes, penalties and interest for the years ending on or before 31 December 2016.

    The income should be declared as arising in the year ended 31 December 2016. Assets held outside Country A whose income could fall within the amnesty program include bank deposits, investment portfolios, insurance policies, shares or other property. Funds will need to be repatriated by 30 June, and any repatriation after that date will be subject to 10% penalty.

    Considering the time it could take to sell the commercial property, it could take mean that the funds will not be repatriated by 30 June and my parents will be liable to pay the 10% penalty - which currently calculates to £15,000.

    While my parents are happy to declare the income, they don't want to sell the property. Instead, they have been advised that by adding my name to the property they won't need to sell the property and repatriate the funds of the property sale to Country A.

    I want to help my parents, but also want to ensure that I don't fall foul of any SD laws that could affect my house purchase.
    Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared - Buddha
Page 1
    • Nicosy
    • By Nicosy 15th May 18, 11:24 AM
    • 12 Posts
    • 12 Thanks
    Nicosy
    • #2
    • 15th May 18, 11:24 AM
    • #2
    • 15th May 18, 11:24 AM
    You would definitely want the purchase of your house to go through ASAP, which sounds like the case.

    To qualify as a FTB under the new stamp duty rules, you canít:

    - Have ever owned a property anywhere in the world. If youíve ever owned any property, anywhere, any time, youíre out.
    - Be buying your property as a buy-to-let.

    If your house goes through prior to taking on your parents flat then you'll be liable for an extra 3%+ stamp duty tax surcharge on additional properties over £40,000. It's staggered just like stamp duty.

    Additional Property price Stamp duty rate
    First slice: From £40,000.01 to £125,000 3%
    Second slice: from £125,000.01 to £250,000 5%
    Third slice: from £250,000.01 to £925,000 8%
    Fourth slice: from £925,000.01 to £1,500,000 13%
    Fifth slice: over £1,500,000.01 15%

    There's a really comprehensive write up on the new stamp duty rules, including for FTBs and second homes on lifetise dot com /new-stamp-duty-rates/ (won't let me post the link as a noob!)
    • kingstreet
    • By kingstreet 15th May 18, 11:29 AM
    • 33,703 Posts
    • 18,280 Thanks
    kingstreet
    • #3
    • 15th May 18, 11:29 AM
    • #3
    • 15th May 18, 11:29 AM
    You would definitely want the purchase of your house to go through ASAP, which sounds like the case.

    To qualify as a FTB under the new stamp duty rules, you canít:

    - Have ever owned a property anywhere in the world. If youíve ever owned any property, anywhere, any time, youíre out.
    - Be buying your property as a buy-to-let.

    If your house goes through prior to taking on your parents flat then you'll be liable for an extra 3%+ stamp duty tax surcharge on additional properties over £40,000. It's staggered just like stamp duty.

    Additional Property price Stamp duty rate
    First slice: From £40,000.01 to £125,000 3%
    Second slice: from £125,000.01 to £250,000 5%
    Third slice: from £250,000.01 to £925,000 8%
    Fourth slice: from £925,000.01 to £1,500,000 13%
    Fifth slice: over £1,500,000.01 15%

    There's a really comprehensive write up on the new stamp duty rules, including for FTBs and second homes on lifetise dot com /new-stamp-duty-rates/ (won't let me post the link as a noob!)
    Originally posted by Nicosy
    Although there is a £40k property value start point to the SDLT surcharge, it starts at £0, not £40k, if it should apply.
    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.
    • davidmcn
    • By davidmcn 15th May 18, 11:37 AM
    • 8,045 Posts
    • 8,320 Thanks
    davidmcn
    • #4
    • 15th May 18, 11:37 AM
    • #4
    • 15th May 18, 11:37 AM
    - Have ever owned a property anywhere in the world. If you've ever owned any property, anywhere, any time, you're out.
    Originally posted by Nicosy
    Not "any" property - a dwelling.

    Unfortunately for the OP, a mixed-use property which includes a dwelling would exclude them. But if they, for example, only had an interest in the shop, they'd be in the clear.
    • ReadingTim
    • By ReadingTim 15th May 18, 11:37 AM
    • 2,774 Posts
    • 3,980 Thanks
    ReadingTim
    • #5
    • 15th May 18, 11:37 AM
    • #5
    • 15th May 18, 11:37 AM
    I would suggest that if you're saving your parents £15k by adding you name to the commercial property, the least they could do would be to pay your £1.5k stamp duty for you....
    • pinklady21
    • By pinklady21 15th May 18, 11:52 AM
    • 658 Posts
    • 473 Thanks
    pinklady21
    • #6
    • 15th May 18, 11:52 AM
    • #6
    • 15th May 18, 11:52 AM
    What is the two storey commercial property? Is it flats? a shop with a flat above? or a two storey shop? or something else?
    As others have said, if it is a dwelling, then it will count for Stamp Duty purposes.
    I assume that your parents have checked thoroughly the rules in their own country that what they intend to do (ie sign over their property to you) does not have any other implications for you or them?
    • thermal2844
    • By thermal2844 15th May 18, 12:06 PM
    • 108 Posts
    • 104 Thanks
    thermal2844
    • #7
    • 15th May 18, 12:06 PM
    • #7
    • 15th May 18, 12:06 PM
    As an aside - how would they know if you've owned a house elsewhere in the world if there's no current mortgage running? Seems like a tall order to follow up on that, unless there's something I'm unaware of. Not that I'm advocating lying in any way - merely curious.
    • MrWB
    • By MrWB 15th May 18, 12:27 PM
    • 16 Posts
    • 20 Thanks
    MrWB
    • #8
    • 15th May 18, 12:27 PM
    • #8
    • 15th May 18, 12:27 PM
    As an aside - how would they know if you've owned a house elsewhere in the world if there's no current mortgage running? Seems like a tall order to follow up on that, unless there's something I'm unaware of. Not that I'm advocating lying in any way - merely curious.
    Originally posted by thermal2844
    For the UK probably because SDLT / Transfer forms will need to be filled in tied back to a NI number.

    When they then buy a future property, the same thing will happen and the NI numbers can be tied to multiple properties.

    For overseas properties, I guess through reciprocal agreements between governments? Some may get away with it, others may not - some may get away with it now but end up on fraud charges in the future?

    With the advent of AI, computer learning and data warehousing, these kind of things are going to become easier to catch and more difficult to get away with, though people should be being honest in any case when they fill out the relevant forms and answer the relevatn questions.
    • n15h
    • By n15h 15th May 18, 1:13 PM
    • 135 Posts
    • 5,391 Thanks
    n15h
    • #9
    • 15th May 18, 1:13 PM
    • #9
    • 15th May 18, 1:13 PM
    What is the two storey commercial property? Is it flats? a shop with a flat above? or a two storey shop? or something else?
    As others have said, if it is a dwelling, then it will count for Stamp Duty purposes.
    I assume that your parents have checked thoroughly the rules in their own country that what they intend to do (ie sign over their property to you) does not have any other implications for you or them?
    Originally posted by pinklady21

    Hi, it is a shop with a flat above.

    Yes, my parents have been looking into this for a while. There is some contradictory information from Country A's government about the amnesty so no one is 100% clear on what needs to happen and any implication.

    I don't believe there to be any implications for me but I'll speak to a tax adviser/accountant to double check.
    Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared - Buddha
    • n15h
    • By n15h 15th May 18, 1:15 PM
    • 135 Posts
    • 5,391 Thanks
    n15h
    For the UK probably because SDLT / Transfer forms will need to be filled in tied back to a NI number.

    When they then buy a future property, the same thing will happen and the NI numbers can be tied to multiple properties.

    For overseas properties, I guess through reciprocal agreements between governments? Some may get away with it, others may not - some may get away with it now but end up on fraud charges in the future?

    With the advent of AI, computer learning and data warehousing, these kind of things are going to become easier to catch and more difficult to get away with, though people should be being honest in any case when they fill out the relevant forms and answer the relevatn questions.
    Originally posted by MrWB
    Yes you're right about agreements between governments. It's to do with Common Reporting Standards (CRS) signed between various countries which will let them share financial account information.
    Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared - Buddha
    • n15h
    • By n15h 15th May 18, 1:21 PM
    • 135 Posts
    • 5,391 Thanks
    n15h
    You would definitely want the purchase of your house to go through ASAP, which sounds like the case.

    To qualify as a FTB under the new stamp duty rules, you canít:

    - Have ever owned a property anywhere in the world. If youíve ever owned any property, anywhere, any time, youíre out.
    - Be buying your property as a buy-to-let.

    If your house goes through prior to taking on your parents flat then you'll be liable for an extra 3%+ stamp duty tax surcharge on additional properties over £40,000. It's staggered just like stamp duty.

    Additional Property price Stamp duty rate
    First slice: From £40,000.01 to £125,000 3%
    Second slice: from £125,000.01 to £250,000 5%
    Third slice: from £250,000.01 to £925,000 8%
    Fourth slice: from £925,000.01 to £1,500,000 13%
    Fifth slice: over £1,500,000.01 15%

    There's a really comprehensive write up on the new stamp duty rules, including for FTBs and second homes on lifetise dot com /new-stamp-duty-rates/ (won't let me post the link as a noob!)
    Originally posted by Nicosy
    I looked at the info on that website. Based on that, I've calculated SD to be £7500 i.e.

    £200K property:
    3% on £125K = £3750
    5% on £75K = £3750


    3750+3750 = 7500


    That's still cheaper than £15K.. but a big chunk of savings
    Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared - Buddha
    • 00ec25
    • By 00ec25 15th May 18, 2:36 PM
    • 6,651 Posts
    • 6,253 Thanks
    00ec25
    If your house goes through prior to taking on your parents flat then you'll be liable for an extra 3%+ stamp duty tax surcharge on additional properties over £40,000.

    There's a really comprehensive write up on the new stamp duty rules, including for FTBs and second homes on lifetise dot com /new-stamp-duty-rates/ (won't let me post the link as a noob!)
    Originally posted by Nicosy
    now that it has been established this is a mixed use property then sorry but what you have written is wrong

    there is no higher rate SDLT for mixed use, there is a fixed, but totally different scale

    https://www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-use-rates

    I looked at the info on that website. Based on that, I've calculated SD to be £7500 i.e.
    Originally posted by n15h
    you need to do the calculation again - also take note of the extra that may be needed if there is a rental element as well as a lease element.
    Last edited by 00ec25; 15-05-2018 at 2:39 PM.
    • Nicosy
    • By Nicosy 16th May 18, 10:00 AM
    • 12 Posts
    • 12 Thanks
    Nicosy
    It certainly is, but I agree with one of the posters above that your parents should chip in considering you're helping out. You can work out the net cost (and amount saved) and share it based on your means.
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