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  • FIRST POST
    • Bigbrowney
    • By Bigbrowney 11th Oct 18, 11:41 PM
    • 8Posts
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    Bigbrowney
    Stamp duty help?
    • #1
    • 11th Oct 18, 11:41 PM
    Stamp duty help? 11th Oct 18 at 11:41 PM
    Ok, so this is my first post so please go easy as this is a tricky one to digest! 🤗
    So I bought a house last year for £190k with just myself on the title deeds and mortgage, I paid stamp duty for the purchase (can't remember the exact figure) and I signed a deeds of consent to allow my Fianc! to live with me and she has been on the electoral roll since we moved in together.
    18 months later and a lot of work to the house it is now worth approx £70k more than I paid for it and I would like to release some equity in order to complete the full renovations (approx £15k).
    Problem 1 Due to the refurb of the property - approx £30k of personal debt, I on paper can no longer afford the mortgage I have let alone a remortgage for £15k more (I took out the mortgage 18 months ago with zero debt) so I would like to add my Fianc! to the mortgage and deeds if necessary to increase the affordability and thus allow us to remortgage for a higher amount

    Problem 2 My Fianc! already owns a property from 10 years ago and a past relationship, she has not lived nor stepped foot in that house since she left her ex partner so it has not been her main residence since 2008.
    She has been trying since then to get her name removed from the mortgage by means of a name change to his father as guarantor but her ex is too lazy to do anything and has just allowed the situation to drag on.
    Her ex still lives in the property with his wife (wed in 2010) and 3 children so she cannot force him to sell as a solicitor has told us no court will push through a force of sale when young children are involved.
    My fiance has wanted to be rid of this situation since they split up but he has been too lazy to sort anything out.

    The question now lies... If I want to add my fiance to the deeds of MY house and ultimately to a mortgage application is there any stamp duty to pay on her part?
    I've been scouring the internet for weeks now trying to find an answer but have failed so far, if there are any clever clogs on here who can give me some guidance it would be greatly appreciated.

    Thanks!

    Ash.
Page 1
    • soulsaver
    • By soulsaver 11th Oct 18, 11:52 PM
    • 2,085 Posts
    • 944 Thanks
    soulsaver
    • #2
    • 11th Oct 18, 11:52 PM
    • #2
    • 11th Oct 18, 11:52 PM
    Ask your solicitor, while enquiring about the costs.
    • Mutton Geoff
    • By Mutton Geoff 12th Oct 18, 7:34 AM
    • 1,204 Posts
    • 1,324 Thanks
    Mutton Geoff
    • #3
    • 12th Oct 18, 7:34 AM
    • #3
    • 12th Oct 18, 7:34 AM
    You can’t “name change” a mortgage. The old house will have to be remortgaged with the subsequent tests on affordability of the new mortgagees.
    Compensation/Refunds - £4,165 | Stooz Profits - £7,636 | Quidco - £4,060 | Tax Avoidance - £107,000
    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • Doozergirl
    • By Doozergirl 12th Oct 18, 7:55 AM
    • 25,947 Posts
    • 70,154 Thanks
    Doozergirl
    • #4
    • 12th Oct 18, 7:55 AM
    • #4
    • 12th Oct 18, 7:55 AM
    Stamp duty is payable even if she's your wife, on the consideration of the mortgage. The 3% surcharge is an issue. And she's not your wife yet, even.

    That's a very expensive way of borrowing just £15k. Are you wanting to consolidate that £30k as well as the £15k?
    Everything that is supposed to be in heaven is already here on earth.
    • Bigbrowney
    • By Bigbrowney 12th Oct 18, 9:07 AM
    • 8 Posts
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    Bigbrowney
    • #5
    • 12th Oct 18, 9:07 AM
    • #5
    • 12th Oct 18, 9:07 AM
    We've kind of put that to bed now anyway and we're no longer pursuing it... whatever happens my other half is owed half of any profits from future sale of the house as she owns half of the house.
    He's just too stupid to realise that.
    • Bigbrowney
    • By Bigbrowney 12th Oct 18, 9:10 AM
    • 8 Posts
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    Bigbrowney
    • #6
    • 12th Oct 18, 9:10 AM
    • #6
    • 12th Oct 18, 9:10 AM
    I wasn't planning on consolidation of the £30k as I will probably have that paid off in 4-5 years, the £15k was for additional work to the exterior of the house, windows / roof and cladding.
    I'm not in a position to borrow more and the exterior work required won't wait 5 years.
    • Bigbrowney
    • By Bigbrowney 12th Oct 18, 9:16 AM
    • 8 Posts
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    Bigbrowney
    • #7
    • 12th Oct 18, 9:16 AM
    • #7
    • 12th Oct 18, 9:16 AM
    So basically there will be some stamp duty to pay? What exactly I still can't figure out as I've paid what I owed when I purchased the house so I assume it will be the difference of that subtracted from anything owed by my fianc! entering into the mortgage.
    • Mutton Geoff
    • By Mutton Geoff 12th Oct 18, 10:43 AM
    • 1,204 Posts
    • 1,324 Thanks
    Mutton Geoff
    • #8
    • 12th Oct 18, 10:43 AM
    • #8
    • 12th Oct 18, 10:43 AM
    whatever happens my other half is owed half of any profits from future sale of the house as she owns half of the house.
    He's just too stupid to realise that.
    Originally posted by Bigbrowney
    I wouldn’t count on it. Non contribution to upkeep, mortgage payments etc. Tenants in common or joint tenants on the deeds? Too many variables to assume automatic entitlement to half this late in the day.
    Compensation/Refunds - £4,165 | Stooz Profits - £7,636 | Quidco - £4,060 | Tax Avoidance - £107,000
    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • Bigbrowney
    • By Bigbrowney 12th Oct 18, 4:23 PM
    • 8 Posts
    • 0 Thanks
    Bigbrowney
    • #9
    • 12th Oct 18, 4:23 PM
    • #9
    • 12th Oct 18, 4:23 PM
    Joint tenants, the upkeep and payment of mortgage is irrelevant, she is legally entitled to an equal share of any profits on the house when it is sold.
    The house can also not be sold or remortgaged without her consent.
    She has an equal right to whole property, and should her ex pass away then she would receive the whole rights to the property.
    • SMR710
    • By SMR710 12th Oct 18, 8:23 PM
    • 28 Posts
    • 12 Thanks
    SMR710
    What is a Fianc! ??!!
    • Bigbrowney
    • By Bigbrowney 13th Oct 18, 12:07 AM
    • 8 Posts
    • 0 Thanks
    Bigbrowney
    Fiance, it would appear when you spell it correctly with the accented "e" you get an !
    • Bigbrowney
    • By Bigbrowney 13th Oct 18, 8:21 AM
    • 8 Posts
    • 0 Thanks
    Bigbrowney
    Wow, ok... It's not an inability to understand basic Stamp duty this is a somewhat more complex situation that is not straightforward, I don't see anyone on here including yourself being able to help with an answer!

    When did I say that she was married? Did I ever say that? She was not married previously she entered into a mortgage agreement with an ex partner 10 years ago... There was nothing to settle on separation, her right to the property is legally binding regardless of mortgage contribution - we have already been told this by our solicitor.

    The point of this thread is to try and ascertain how stamp duty is calculated when someone is added to deeds and a mortgage and that person already owns another property, I understand that anything over a purchase price of £125k is subject to standard SDLT but if she is only liable for half of the mortgage amount (approx £95k) then is it payable on her part?
    • Mutton Geoff
    • By Mutton Geoff 13th Oct 18, 8:51 AM
    • 1,204 Posts
    • 1,324 Thanks
    Mutton Geoff
    My understanding would be a new transaction is about to take place, you will be "selling" your house, value £260k to both of you.


    The stamp duty will "normally" be £3,000 but will suffer from second property tax, so you will pay £10,800 for this transaction, £7,800 refunded if her second house is sold within 3 years.


    https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro


    SDLT is not linked to how much you are borrowing, it is the "consideration", ie property value.


    Why not just ring the HMRC helpline, they will tell you the definitive rule?
    Compensation/Refunds - £4,165 | Stooz Profits - £7,636 | Quidco - £4,060 | Tax Avoidance - £107,000
    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • Bigbrowney
    • By Bigbrowney 13th Oct 18, 9:02 AM
    • 8 Posts
    • 0 Thanks
    Bigbrowney
    Thank you for trying to answer the question I was actually asking, some others seem to find that difficult.
    • 00ec25
    • By 00ec25 13th Oct 18, 10:35 AM
    • 7,077 Posts
    • 6,777 Thanks
    00ec25
    The point of this thread is to try and ascertain how stamp duty is calculated when someone is added to deeds and a mortgage and that person already owns another property, I understand that anything over a purchase price of £125k is subject to standard SDLT but if she is only liable for half of the mortgage amount (approx £95k) then is it payable on her part?
    Originally posted by Bigbrowney
    it has been explained in post #4 that SDLT will be based
    on the consideration of the mortgage. The 3% surcharge is an issue.
    she owns an existing property so she meets condition C - existing owner
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09780

    she is not selling that property so she meets condition D - non replacement of a main residence
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800

    the higher rate threshold starts at 40k so she meets condition A (see below re chargeable consideration)
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09770

    the property itself is, we assume, not a leasehold with a short lease, so she meets condition B
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09775

    On the basis of the above, Conditions A-D apply and any transaction is a higher rate one
    https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property

    SDLT is based on chargeable consideration. In the context of a transfer of equity for an existing owner to a non owner there are 2 possibilities:
    a) where no cash physically changes hands the consideration is either nothing (because it is a gift)
    or,
    b) where there is a mortgage, as she is not an existing co owner, the consideration is 50% of the value of the o/s mortgage
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04040a

    The rules re mortgages apply whether married or not, although this page gives the example of married people transferring between themselves

    https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

    PS if you and she want to avoid the higher rate SDLT then do the transfer after you have got married, as transfers between spouses are now exempt from the higher rate - but still subject to the standard rate
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09820
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