Stamp duty changes

daz · 2 Mar 2016 at 08:35

muon said:
Example 9 is basically what you are doing.

There's no point speculating as to the minutiae here, the example quoted is based on the draft consultation that was put out. The report from the consultation will be out soon and the legislation will be based on that, most likely with a few tweaks.

It is expected that there will be some way to designate somewhere as your main property, at least similarly to how CGT works on your primary residential property. But the safest thing to do as it stands is to push through and complete before the 1st of April.

#Chri5# · 2 Mar 2016 at 08:51

David _b said:
I have never bought a house before

What is "completion" ? Is there a final signing of something ? Can I impose a condition that I need to complete this month or the deal may be at risk if I can't complete in March.

Typically, you exchange contracts (which legally binds you to buy the property) and then complete the purchase (money changes hands) a given time later. Exchange and completion could be the same day (rate IMO) or 1 to 2 weeks. For our recent purchase, we exchanged Thursday 11th Feb and completed Friday 19th Feb.

You could certainly say you must complete this month (I read something the other day about a mortgage rush as people try to avoid this increase) but it may depend if you have other people in the chain and them being ready.

David _b · 2 Mar 2016 at 08:56

I am a first time buyer and I will contact seller directly today to get a grasp on his situation but I believe he is not in chain and indeed a month ago he had stuff packed up already.

I have emailed the agent and told them my situation, I will ask my solicitor today too

There is no doubt it does genuinely put the deal at risk as I don't need the house enough to go try find another £3700 that I don't have as pushed most funds into 20% deposit

It would nearly be tempting to sit tight then just move into the house I own that is let out, if I can't avoid the stamp duty

Felix · 2 Mar 2016 at 09:01

Unfortunately flipping your main residence won't work with the second home stamp duty.

Skillmister · 2 Mar 2016 at 09:20

Fact of the matter OP is we just don't know the exact details at the moment. It's absolutely ridiculous that we can't advise people properly at the moment and by the time we can it will be too late for people to change plans.

It seems like there are going to be some unfortunate sticking points for people who already own a property (but don't live in it) and currently live in rented/with parents etc where they will have to pay the extra fees, even though they are technically "replacing" their main residence, they just don't own their main residence so it isn't being sold.

It's also highly unlikely you will complete before 1 April if you are at the very beginning stages now so it may be worth considering pulling out to save on legal costs if you won't be buying it if you have to pay extra fees.

Also a note, don't read anything except from here i've seen so many misinterpretations on 3rd party sites already its hilarious.

David _b · 2 Mar 2016 at 12:07

We'll have been to a few doors

Solicitor of mine never knew I had another house. They do now. They still feel completion this month is a option
I told the agent I don't need the new house enough to pay 3700. Also told the seller as have his number and he fully agreed and is ready to move he is annoyed it's been taking so long himself, as he is living out of boxes past 3 weeks.

Solicitor I meet at 2pm so will see how that goes. But have decided I either complete this month.... Or I pull out.

Freefaller · 2 Mar 2016 at 13:16

Could you... legally of course, put an existing title deed in another name (wife's name for example) and you buy a property as a first time buyer?

Then in due course put the deeds back in both your names?

Our house purchase fell through earlier this year and I very much doubt we will find somewhere and complete in 4 weeks

So looking at ways of minimising our stamp duty or any other ridiculous charges.

Skillmister · 2 Mar 2016 at 13:29

Freefaller said:
Then in due course put the deeds back in both your names?

Transferring the newly bought one would attract Stamp Duty if the outstanding mortgage was above the threshold.

Freefaller · 2 Mar 2016 at 13:31

So if you waited until the mortgage was below would that be legal / feasible?

If my name isn't on any deed for example, and I bought it, I'd be considered a first time buyer no?

Then wait until the mortgage drops below the new threshold and then go back on both properties?

It gets tricky if you want to buy a 3rd of 4th property though!

Skillmister · 2 Mar 2016 at 13:35

Should be assuming the currently owned property is mortgage free.

This is of course on the basis HMRC haven't thought of people doing this...

Freefaller · 2 Mar 2016 at 13:37

Skillmister said:
Should be assuming the currently owned property is mortgage free.

This is of course on the basis HMRC haven't thought of people doing this...

Mortgage free we are - until we buy our new house! Oh how I wish I was a cash buyer!

Skillmister · 2 Mar 2016 at 14:01

Do you want me to hold your current property in my name for you temporarily?

Felix · 2 Mar 2016 at 14:03

How about, I own a property, I sell to a 3rd party (who doesn't own home). I buy a new home, the 3rd party then sells me back my initial property at way below market value....

David _b · 2 Mar 2016 at 14:33

Complete on Wednesday 16th March

Freefaller · 2 Mar 2016 at 14:36

Skillmister said:
Do you want me to hold your current property in my name for you temporarily?

Would that be legal?

Skillmister · 2 Mar 2016 at 15:13

Freefaller said:
Would that be legal?

Yeah of course. No Stamp Duty payable on gifts (so long as theres no other consideration such as mortgages). You buy your new house as your main residence and only property so higher rates don't apply. Then get the BTL transferred back for 0 consideration and you're in business.

Shoza · 2 Mar 2016 at 15:18

The Land Registry share data with HMRC - good look trying to play games to avoid the tax.

Skillmister · 2 Mar 2016 at 15:20

I'm not a tax lawyer, I'm speaking from a property side of things.

daz · 2 Mar 2016 at 15:33

Freefaller said:
Could you... legally of course, put an existing title deed in another name (wife's name for example) and you buy a property as a first time buyer?

At the moment, the consultation considers that if any one of a married couple owns a property, they both own a property for the SDLT2 purpose. I doubt this will change since gifting between spouses is very easy from a tax perspective, so it would nullify the intention of the proposal.

Freefaller · 2 Mar 2016 at 15:38

Shoza said:
The Land Registry share data with HMRC - good look trying to play games to avoid the tax.

I'm not trying to avoid I'm trying to reduce. Subtle but very important difference.