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    • will_yateley
    • By will_yateley 7th Aug 18, 1:37 PM
    • 4Posts
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    will_yateley
    Minimising stamp duty??
    • #1
    • 7th Aug 18, 1:37 PM
    Minimising stamp duty?? 7th Aug 18 at 1:37 PM
    Hello all, first post on here, so bare with me ...
    I have a property in my name with no mortgage.
    I have a few others that I rent out.
    My wife has no properties in her name.
    We want to buy a bigger house but keep our current one to rent it out.
    I need to re-mortgage (BTL) the current house to raise funds for the deposit for the new house (approx. 200k).
    What's my best way to minimise stamp duty on the whole transaction?
    If my wife buys the new house in her name only but with a deposit gifted from me, would I pay stamp duty on the capital raised from the re-mortgage?
    If the new house is in her name but I plan to live there, does she lose the low stamp duty rights and we have to pay 'additional property rates' of stamp duty?

    If I get a sole proprietor dual income mortgage with the new house in her name, and myself as the additional borrower, could she then pay the lower rates of stamp duty? Not sure how this works with married couples.

    My solicitor doesn't know the answers and my mortgage broker has lots of products to offer but needs the legal nod to go ahead, so I don't get caught out with an unexpected bill at the end.

    Any advice on this would be greatly appreciated.
Page 1
    • Typhoon2000
    • By Typhoon2000 7th Aug 18, 2:29 PM
    • 886 Posts
    • 435 Thanks
    Typhoon2000
    • #2
    • 7th Aug 18, 2:29 PM
    • #2
    • 7th Aug 18, 2:29 PM
    If you are married then your are-treated as one unit when it come to additional stamp duty. So if your wife buys her first house on her own with her own money, she will have to pay additional stamp duty if you retain your current main residence.
    • sparkey1
    • By sparkey1 7th Aug 18, 2:34 PM
    • 439 Posts
    • 193 Thanks
    sparkey1
    • #3
    • 7th Aug 18, 2:34 PM
    • #3
    • 7th Aug 18, 2:34 PM
    Possible solution for you.


    Form a limited company. This gets around clause 24.


    Sell the house you live in, to the company, and let the company let it out. Yes the company will have to pay stamp duty or the house with the additional 3%. On the same day, both of you move out, and into a new home. You wont then be required to pay the additional 3 per cent stamp duty as you have disposed of your old home, and changed your residence. Just normal stamp. Depending on how much you sell your old home for, and what you buy there could be quite a difference in stamp duty, if you had done it without selling your old home.


    The sole proprietor route will not save you stamp duty on the new purchase. It will also lessen your chances of getting a mortgage as there are few lenders that entertain it.
    • Typhoon2000
    • By Typhoon2000 7th Aug 18, 2:43 PM
    • 886 Posts
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    Typhoon2000
    • #4
    • 7th Aug 18, 2:43 PM
    • #4
    • 7th Aug 18, 2:43 PM
    However, as you are introducing your own house into your letting bussiness your are at a tremendous financial advantage when it comes to tax relief on interest costs. Your property is introduced at its current value, not the original purchase price.

    So if your house is valued at 400k, and your new place is say 500k; you Mortgage your old place for 200k by way of a BTL mortgage Touse towards a depojsit for the new place, and get a 300k Mortgage on your new place, your interest costs on the BTL is the full 400k ( 200k BTL loan and 200k main home loan).

    So even when S24 kicks in full in 3 years time, you can effectively still claim on the full 200k borrowed for the BTL. Till that time you are better off then a lower tax rate punter or a limited company.
    • sparkey1
    • By sparkey1 7th Aug 18, 2:51 PM
    • 439 Posts
    • 193 Thanks
    sparkey1
    • #5
    • 7th Aug 18, 2:51 PM
    • #5
    • 7th Aug 18, 2:51 PM
    Would be useful if we knew your estimated purchase price for the new house, and the value of the old house.
    • will_yateley
    • By will_yateley 9th Aug 18, 7:06 AM
    • 4 Posts
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    will_yateley
    • #6
    • 9th Aug 18, 7:06 AM
    • #6
    • 9th Aug 18, 7:06 AM
    Thanks for the replies so far, everyone and sorry for the late response.

    Firstly, if I sold my current house to a ltd company, I'd have to pay capital gains as well, so would be costly in the short term.
    And because I own a few flats as well, I still wouldn't be back on the lower rates. If as Typhoon says above, a married couple are treated as one, this wouldn't allow me to get around it.

    Just for a bit more detail ...
    Bought the current house in 2000 for 123k.
    Now valued approx. 350k.
    No mortgage on current house.
    I have 6 flats that I let out, 5 of which have BTL mortgages.
    New house 550k.
    I was going to re-mortgage the current house for about 230 on BTL.
    Then add approx. 50k from savings.
    Mortgage on new place approx. 270.
    Stamp duty on 550 is 34k full rates or 17.5 as a first purchase.
    The 16.5 saved would allow me to reduce the mortgage and further reduce the SD.

    Hope that makes it clearer. Any top tips would be greatly appreciated.
    • haras_nosirrah
    • By haras_nosirrah 9th Aug 18, 7:39 AM
    • 1,567 Posts
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    haras_nosirrah
    • #7
    • 9th Aug 18, 7:39 AM
    • #7
    • 9th Aug 18, 7:39 AM
    I am afraid that there is no way around it. You will be paying the higher rate stamp duty as you own multiple properties. It is people like yourself the legislation was designed to catch.

    If you want to keep your other properties you will have the pay the additional taxes associated with the transaction.
    • Pixie5740
    • By Pixie5740 9th Aug 18, 7:48 AM
    • 13,148 Posts
    • 18,930 Thanks
    Pixie5740
    • #8
    • 9th Aug 18, 7:48 AM
    • #8
    • 9th Aug 18, 7:48 AM
    Thanks for the replies so far, everyone and sorry for the late response.

    Firstly, if I sold my current house to a ltd company, I'd have to pay capital gains as well, so would be costly in the short term.
    And because I own a few flats as well, I still wouldn't be back on the lower rates. If as Typhoon says above, a married couple are treated as one, this wouldn't allow me to get around it.

    Just for a bit more detail ...
    Bought the current house in 2000 for 123k.
    Now valued approx. 350k.
    No mortgage on current house.
    I have 6 flats that I let out, 5 of which have BTL mortgages.
    New house 550k.
    I was going to re-mortgage the current house for about 230 on BTL.
    Then add approx. 50k from savings.
    Mortgage on new place approx. 270.
    Stamp duty on 550 is 34k full rates or 17.5 as a first purchase.
    The 16.5 saved would allow me to reduce the mortgage and further reduce the SD.

    Hope that makes it clearer. Any top tips would be greatly appreciated.
    Originally posted by will_yateley
    You wouldn't have to pay CGT if you sold your current home to a limited company because you'd be entitled to PRR. You would however lose the benefit of PRR further down the line should you eventually dispose of the property. Not that I think selling the property to a limited company would be of much benefit anyway.

    The upshot is that if you want to avoid paying the higher rate of SDLT when you purchase your new home you will need to sell your current home before/at the same time as buying the new one or if you sell it within 3 years of buying your new home you can claim back the additional SDLT.

    If you're not prepared to sell your current home then you're just going to have to suck up the higher rate.
    • haras_nosirrah
    • By haras_nosirrah 9th Aug 18, 8:08 AM
    • 1,567 Posts
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    haras_nosirrah
    • #9
    • 9th Aug 18, 8:08 AM
    • #9
    • 9th Aug 18, 8:08 AM
    You wouldn't have to pay CGT if you sold your current home to a limited company because you'd be entitled to PRR. You would however lose the benefit of PRR further down the line should you eventually dispose of the property. Not that I think selling the property to a limited company would be of much benefit anyway.

    The upshot is that if you want to avoid paying the higher rate of SDLT when you purchase your new home you will need to sell your current home before/at the same time as buying the new one or if you sell it within 3 years of buying your new home you can claim back the additional SDLT.

    If you're not prepared to sell your current home then you're just going to have to suck up the higher rate.
    Originally posted by Pixie5740
    Not just their main home - they would have to sell the 6 btl flats as well
    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.
    • will_yateley
    • By will_yateley 9th Aug 18, 11:10 AM
    • 4 Posts
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    will_yateley
    so if my wife bought the new house in her name only, how much less SD would I pay (roughly)?
    And would this still not count as we're married and treated as one?
    And would we also get hit because the money for the deposit is raised from another property?
    • TrickyDicky101
    • By TrickyDicky101 9th Aug 18, 11:24 AM
    • 3,170 Posts
    • 2,087 Thanks
    TrickyDicky101
    You need to sell your current residential property to make any savings - that would then save you the 3% additional rate SDLT (which is what Pixie has already told you).
    • Pixie5740
    • By Pixie5740 9th Aug 18, 11:28 AM
    • 13,148 Posts
    • 18,930 Thanks
    Pixie5740
    so if my wife bought the new house in her name only, how much less SD would I pay (roughly)?
    And would this still not count as we're married and treated as one?
    And would we also get hit because the money for the deposit is raised from another property?
    Originally posted by will_yateley
    That depends, what exactly are you proposing? To sell all your rental properties therefore getting hit with CGT or to sell your current home and replace it with a new one or to keep the current home and your wife buy another home in her name only, not just as a legal owner but a beneficial owner as well.

    Have you actually taken the time to read the SDLT manuals and guidance notes?
    • AnotherJoe
    • By AnotherJoe 9th Aug 18, 11:57 AM
    • 11,003 Posts
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    AnotherJoe
    Whatever shenanigans* you get up to, whoever buys, whatever the source of the deposit (which is utterly irrelevant), if you do not replace your current home, but retain it, you will be liable for the extra SDLT when you buy another property, whether thats to live in or even to rent out.

    * outside the much more expensive route of creating a company and moving your existing properties and placing them in that.
    • sparkey1
    • By sparkey1 9th Aug 18, 12:07 PM
    • 439 Posts
    • 193 Thanks
    sparkey1
    I am afraid that there is no way around it. You will be paying the higher rate stamp duty as you own multiple properties. It is people like yourself the legislation was designed to catch.

    If you want to keep your other properties you will have the pay the additional taxes associated with the transaction.
    Originally posted by haras_nosirrah
    This isnt correct. Long post!

    The 3% additional stamp duty is based on primary place of residence. A couple can own 1000 Buy to Let properties, and have one property they use as their primary place of residence. If they buy another property and move into it, and dispose of their former primary residence, they do not pay the extra 3%.

    If they keep their former private residence, because they haven't disposed of it they have to pay the additional 3% on the new property.

    So if the OP wanted to keep the old property, and avoid the 3% on the new property they have to dispose of the old. This can be achieved by setting up a Limited Company that buys the old property.

    In this case the company would pay the stamp duty on the 350K valuation. Which including the 3% surcharge equals 18000. The new property being bought by the OP would then be exempt the 3% so on a 550K purchase they would pay 17500. 35.5K total

    If the Op kept the original property, and didnt sell it to a company that he forms, he would be liable to the additional 3% so the total stamp on 550K would be 34K. So in this case, its actually cheaper to not set up the lld company if all we are trying to do is save stamp. We didnt know all the figures at the start of this thread.

    However the OP has indicated that he has a number of BTL properties, so going forward he is going to be hit with Clause 24 so a Ltd Coy could be a solution to cut that tax bill dependant upon circumstances
    Last edited by sparkey1; 09-08-2018 at 12:09 PM.
    • SDLT Geek
    • By SDLT Geek 9th Aug 18, 8:16 PM
    • 325 Posts
    • 190 Thanks
    SDLT Geek
    First time buyers relief is a non starter here because the price proposed is over 500,000.

    Oddly otherwise it can be possible for one spouse owning no property to benefit from first time buyers relief even though the other spouse owns properties but escapes the 3% surcharge because of the replacement exception. See the pdf linked from here: https://www.blakemorgan.co.uk/news-events/blog/sdlt-first-time-buyers-relief/
    • haras_nosirrah
    • By haras_nosirrah 9th Aug 18, 9:21 PM
    • 1,567 Posts
    • 2,835 Thanks
    haras_nosirrah
    This isnt correct. Long post!

    The 3% additional stamp duty is based on primary place of residence. A couple can own 1000 Buy to Let properties, and have one property they use as their primary place of residence. If they buy another property and move into it, and dispose of their former primary residence, they do not pay the extra 3%.

    If they keep their former private residence, because they haven't disposed of it they have to pay the additional 3% on the new property.

    So if the OP wanted to keep the old property, and avoid the 3% on the new property they have to dispose of the old. This can be achieved by setting up a Limited Company that buys the old property.

    In this case the company would pay the stamp duty on the 350K valuation. Which including the 3% surcharge equals 18000. The new property being bought by the OP would then be exempt the 3% so on a 550K purchase they would pay 17500. 35.5K total

    If the Op kept the original property, and didnt sell it to a company that he forms, he would be liable to the additional 3% so the total stamp on 550K would be 34K. So in this case, its actually cheaper to not set up the lld company if all we are trying to do is save stamp. We didnt know all the figures at the start of this thread.

    However the OP has indicated that he has a number of BTL properties, so going forward he is going to be hit with Clause 24 so a Ltd Coy could be a solution to cut that tax bill dependant upon circumstances
    Originally posted by sparkey1
    whether paying the additional 3% stamp duty on the new property or paying the additional 3% stamp duty on the old property via a limited company (which even though a seperate legal entity is still being funded by them) my point stands that they can't keep both properties and avoid the 3% stamp duty regardless of which property they pay it against.
    Last edited by haras_nosirrah; 09-08-2018 at 9:24 PM.
    • will_yateley
    • By will_yateley 16th Aug 18, 1:02 PM
    • 4 Posts
    • 0 Thanks
    will_yateley
    Thanks for all the replies above - really appreciate it.
    Maybe if this house falls through, I'll sell the current property before buying the next.
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