Stamp duty question

[theboyfold]

What's the deal with stamp duty? I'm a little confused!

I've just accepted an offer on my place, which I have in my own name and we (the wife and I) are moving to her place. Now she owns this place with her brother and his lady. The easiest way to explain the situation is that the house is split into fifths.

My OH owns 1/5 and has a share of the mortgage equivalent to 1/5
The same with her brother
His OH has a 1/5 share of the mortgage.

So I will be buying out 1/5 of the equity and 2/5s of the mortgage.

We won't be getting a new mortgage if that makes any difference, both Scotal and the Nationwide (lender) have explained this won't be required.

So what level of stamp duty will I be exposing myself to? The purchase price is £249k if that makes any difference.

[Meeja]

How exactly is this working?

Are you effectively re-purchasing the house at current market value in equal 5ths? (You 2/5, and three others at 1/5 each) or are you just "buying in"?

If the property is effectively being "sold" then I would have thought that Stamp Duty would come into play at 1%

Mortgages are irrelevant, as Stamp Duty is due on the purchase price of the property, regardless of whether it is bought with cash, cheque, mortgage, gold bullion, or stolen lead from the church roof.

One thing to remember about stamp duty is that it is not properly tiered in the same way that your PAYE tax is.

If you buy somewhere at £300,000, you pay 3% on the FULL amount, rather than 0% on the first £124,999, 1% on £125,000 to £249,999, and 3% on £250,000 to £300,000.... ludicrous.

I'm sure a more knowledgable person (Eric Mc?!) will be along in a mo to give a better explanation!

[theboyfold]

My OH, her brother and his OH are all on the deeds and on the mortgage, so the OH and I are looking to remove them, pay them off and sink what's left into the house.

I've found this on the HMRC website, but it's for people who are getting divorced normally, I'm not sure if our circumstances effect it or not....:

HMRC said:

A house is valued at £180,000. The transferring partner has equity of £90,000 and there is an outstanding mortgage of £90,000.

The transferee partner pays a cash sum equivalent to half the equity and acquires a 50% share in the property.

The consideration in this case will be the cash payment (£45,000) plus 50% of the outstanding mortgage (£45,000) = £90,000. As this is below the stamp duty land tax threshold of £125,000 there will be no tax to pay.

Although there is no tax to pay, details of the transaction must be returned in a land transaction return.

So I think that if I can keep the equity I 'buy' + 50% of the mortgage below £125,000 I should be ok...

[Meeja]

Mark,

Mrs M works for HMRC... I've asked her to raise your question with an appropriate person in the office (Mrs M does inheritance and PAYE stuff, not Stamp Duty!)

I'll email you any feedback I get!

[theboyfold]

Thank you squire! I think at the moment I'm £1750 over the threshold, but I just need to make sure and see if there is a way I can bring myself back under.

[theboyfold]

Just spoken to a solicitor and it looks like I will be liable for stamp duty

[Soovy]

theboyfold said:

Just spoken to a solicitor and it looks like I will be liable for stamp duty

Of course you will!

[theboyfold]

Soovy said:

theboyfold said:

Just spoken to a solicitor and it looks like I will be liable for stamp duty

Of course you will!

Only if what I take on is over £125k and from my sums based on what I've read showed that I would be ok, however they were based on 2 people owning the house originally. However, as I'm buying out 2 other people the share I'm buying/taking on is 60% and not 50%.

So it's not that simple...

[theboyfold]

Is there an expert on property law / tax who would be able to answer a question for me?

It's about trust deeds and if it's possible for my wife to raise her stake before I buy the other partners out?

[princeperch]

theboyfold said:

Is there an expert on property law / tax who would be able to answer a question for me?

It's about trust deeds and if it's possible for my wife to raise her stake before I buy the other partners out?

You're dealing with an asset worth thousands and thousands of pounds.

Go and pay a solicitor £200.00 to answer your question, based on your exact circumstances.

[theboyfold]

princeperch said:

theboyfold said:

Is there an expert on property law / tax who would be able to answer a question for me?

It's about trust deeds and if it's possible for my wife to raise her stake before I buy the other partners out?

You're dealing with an asset worth thousands and thousands of pounds.

Go and pay a solicitor £200.00 to answer your question, based on your exact circumstances.

£200? I need to find a cheaper solicitor!

ETA: That answer isn't supposed to be cheeky! I understand what I'm asking is cheeky though, and happy to be told 'no' if people don't want to help.

Edited by theboyfold on Tuesday 30th March 21:51

[Soovy]

theboyfold said:

£200? I need to find a cheaper solicitor!

The starting point for many a piece of litigation which has earned me tens of thousands.


You're dealing with tax issues relating to the transfer of an asset worth hundreds of thousands and you baulk at paying someone 200 quid for proper insurance backed advice.

You're daft as a brush.



Keep it up.

Please.

Edited by Soovy on Wednesday 31st March 20:15

[theboyfold]

Soovy said:

theboyfold said:

£200? I need to find a cheaper solicitor!

The starting point for many a piece of litigation which has earned me tens of thousands.


You're dealing with tax issues relating to the transfer of an asset worth hundreds of thousands and you baulk at paying someone 200 quid for proper insurance backed advice.

You're daft as a brush.



Keep it up.

Please.

I'm not baulking at the idea at all. I'm either going to go with the solicitors who put together my wills (when I could have got them done for free) or the ones with the Nationwide who are pretty much half the price. To me the difference is clear, one could if needed give a more 'bespoke' service offering advice and helping avoid the stamp duty whilst the other one will just act on what's put in front of them on the form. Both 'proper insurance backed advice' and BTW I do know that whatever advice I'm given on here is just advice, nothing more, nothing less.

The reason I'm asking on here is I'm not sure if my wife can buy more equity in the house before I buy the rest therefore bringing me in under the stamp duty threshold, it's quite simple really... I can't find anything online to prove or disprove my thinking, so I thought I'd ask here.

Does that sound as daft as a brush to you? Really?

[Soovy]

Not quite as daft as the people who post saying "my balls ache and I've found a lump the size of a golf ball on the left one, should I go to a doctor or just see how it goes?" but close.

Edited by Soovy on Wednesday 31st March 20:57

[theboyfold]

Soovy said:

Not quite as daft as the people who post saying "my balls ache and I've found a lump the size of a golf ball on the left one, should I go to a doctor or just see how it goes?" but close.

I'm not going to bite on that one, I won't give you the pleasure...

anonymous said:

[redacted]

No it's confusing, but being as daft as a brush I'm not surprised

You pretty much have it spot on.

3 people on the mortgage, 2 of whom have £50k originally invested the 3rd who invested nothing at the start.

The value of the equity has gone up since they have all paid towards the mortgage (40%, 40%, 20%)

So there is a transfer of about £56k equity and 60% of the value of the remaining mortgage before my investment, which is about £84k leaving me with a liability of £139k, which is £14k over the stamp duty threshold.

The reason I'm taking on 60% is that's the way the property is split in the trust deeds, my wife has 40%, her brother has 40% and his lady has 20%.

My question is this. Is my wife allowed to invest in more equity before I buy the house to lower the amount that I take on? I would have thought yes, but I'm not sure and can't find anything as a reference point at the moment.

[Soovy]

theboyfold said:

Soovy said:

Not quite as daft as the people who post saying "my balls ache and I've found a lump the size of a golf ball on the left one, should I go to a doctor or just see how it goes?" but close.

I'm not going to bite on that one, I won't give you the pleasure...

anonymous said:

[redacted]

No it's confusing, but being as daft as a brush I'm not surprised

You pretty much have it spot on.

3 people on the mortgage, 2 of whom have £50k originally invested the 3rd who invested nothing at the start.

The value of the equity has gone up since they have all paid towards the mortgage (40%, 40%, 20%)

So there is a transfer of about £56k equity and 60% of the value of the remaining mortgage before my investment, which is about £84k leaving me with a liability of £139k, which is £14k over the stamp duty threshold.

The reason I'm taking on 60% is that's the way the property is split in the trust deeds, my wife has 40%, her brother has 40% and his lady has 20%.

My question is this. Is my wife allowed to invest in more equity before I buy the house to lower the amount that I take on? I would have thought yes, but I'm not sure and can't find anything as a reference point at the moment.

SO SO yours, tonks.

[theboyfold]

anonymous said:

[redacted]

Thanks for going through all that, I think I get your point and I think the advice I've received so far isn't quite right. I was told that I would be taking on 60% of the mortgage, however I wasn't quoting the Trust Deed word for word when I spoke to him.

The trust deed says that the house shall be held between the parties as tenants in common. It's doesn't explicitly declare the ownership of the house is split. It says that the bills / mortgage / fees is split equally and the same should the property be rented out for a shortfall. On sale of the property the net equity is split (after removal of the 2 deposits) 40/40/20, as you assumed correctly above.

Once I am in the property the deed will be burnt and I had nothing to do with it in the first place, but my OH tells me that it was a struggle to get one drawn up.

My understanding of what you have said is that irrespective of the how the equity is split, when I get my name on the mortgage it's a 50/50 split between me and my OH as there will be 2 people on the mortgage. Is this figure plus the equity I've bought how the stamp duty is calculated? Is that bit at least correct?

Thanks again for doing this, I understand you don't have to do this sort of thing And contrary to popular belief I'm happy to pay for a solicitor but I wanted to get it right in my head first, once it's right I would decide which solicitor I would use. See an earlier answer to Soovy for the reason why.

I'm going to scan in the trust deed and email to the solicitor I've spoken to already (not the one who drew up the deed). However when I spoke to him I think I used the phrase "They own 60% of the house" which is incorrect, and may have lead to my sums being out. The 60% is how much they will get from the equity from property once it's sold and has no bearing on the ownership of the house.

If you are interested I'll email you the deed as well, again, I'm happy for you to tell me no as I'm grateful for the help so far.

[theboyfold]

anonymous said:

[redacted]

We've spoken to Nationwide and they are more than happy for 2 parties to be removed and one to be added, I think it's the case as we are outside the fixed term with them.

I've sent you a mail with the link to the deeds.

[Soovy]

anonymous said:

[redacted]

One that does trust deeds for £199.

[theboyfold]

[redacted]