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Help with a second home

(15 Posts)
LowMaintenance101 Fri 27-Oct-17 20:26:20

Evening MNers.
Can anyone advise?
We have one home at the moment, which we live in.
We have found another house which we love and will be putting an offer in soon.
We are toying with keeping our current home on and renting it out.
Have just looked at the stamp duty calculator and the difference is astronomical if you say that you are buying a second home.
My husband just suggested putting our current home in our daughter's name (4 years old), to avoid the extra stamp duty.
Surely it can't be this simple?
If we want advice on this kind if thing, are we looking for an accountant, financial advisor or tax planner?

Mosaic123 Fri 27-Oct-17 21:11:21

A lawyer. I don't think it's allowed but talk to a lawyer to check.

Ellisandra Fri 27-Oct-17 21:15:43

According to this article, in the draft legislation it was included that a property held in trust (which it has to be for an under 18) where the trustees are the parents, would still be subject to the higher rate of stamp duty. Precise to avoid this kind of trick!

Whether that happened (I expect so) would be explained to you by a property law solicitor.

Another thing that I think would stop you - if you are buying for an over 18 child, the home has to be their main residence. To avoid people trying to wriggle out of SDLT. Good luck convincing HMRC that your old house is a 4yo's main residence, and good luck convincing SS of the opposite grin

Another issue - even if it were possible... You can't just give her the house to avoid tax then take it back when it suits you. Are you happy to give away a house sized asset at this point in your life? If your job or health circumstances changed and you wanted to sell the house and use the money - you couldn't.

LowMaintenance101 Fri 27-Oct-17 21:37:54

Thanks for the replies.
I really didn't think it would be a simple loophole.
I want a clean break, get rid of the current house and move into the new one. I like to keep things simple. DH and my DF are keen for us to hang on to our current house.
This could just have swung things my way grin

Ellisandra Fri 27-Oct-17 21:44:43

I think your husband has every right to an opinion, but your father should fuck off out of it!!!

Ambonsai Fri 27-Oct-17 21:46:53

You can get the stamp duty refunded if you sell the first house within a certain time
I think 3 years?

Oddbutnotodd Sat 28-Oct-17 00:26:17

you need to sell within 18 months not 3 years.

Ambonsai Sat 28-Oct-17 00:35:41

Says 36months?

LowMaintenance101 Sat 28-Oct-17 09:31:25

Thanks again. If we had done it, it would have been a long term thing, not with a view to selling in 18 months / 3 years.
The way things are going, it would take an age for house prices to increase enough to cover the extra stamp duty, let alone be something for the retirement pot.
TBC, my DF is only weighing in because we have asked his advice in the past. He is generally very astute, but perhaps not in this case.

Babyroobs Sat 28-Oct-17 10:45:07

The government massively hiked the stamp duty on second homes to discourage buy to let and hopefully try to bring house prices down so that the younger generation stand some kind of chance of getting on the housing ladder.

DoubleAces Sat 28-Oct-17 20:36:24

An idea which saves stamp duty land tax albeit not completely resolving the issue and one we are considering.

Set up an SPV Limited Company for property investment. Sell the property to the SPV ltd company. Ltd Company will have to pay 3% surcharge SDLT rate.

- you now no longer own a principle residence - your existing home has been sold to a Ltd Company which you have shares in.

Buy your next home without attracting the 3% surcharge.

You can do the above in reverse as you will have 3 years if I’m not mistaken to get a refund once your have sold your PPR (1st home)

I would hope that difference between the two lots of SDLT should be a saving vs paying 3% surcharge on the new home. Owning rental company via Ltd Company has advantages e.g full tax relief on mortgage interest (good for higher rate tax payers). Can also assign shares to the kids (though be careful as they probably won’t be eligible for first time buyer SDLT rates or help to buy ISA’s or the future equivalents if you give them shares too early if you see what I mean).

LowMaintenance101 Sat 28-Oct-17 22:05:45

Thank you DoubleAces. I am not taking that in at all, but I will definitely read over it again tomorrow and put it to solicitor.

DoubleAces Sat 28-Oct-17 23:53:18

You're welcome. Please also speak to an accountant who will help explain the tax advantages of buying investment property via a limited company.

Aureservoir Sun 29-Oct-17 00:02:00

Also ask a solicitor about whether you and your DH can declare you have a 'beneficial interest' in a property? I don't know enough about this (only know that Ex H had to declare no 'beneficial interest' in one of our properties in order to transfer it to me, although his name is still on the deeds and the mortgage) - but I think you can have a property nominally owned by one person (i.e. one person named the Land Registry deeds - your daughter, for example) whilst the 'actual' owners are the ones with a beneficial interest in it. Or something. As I say, I don't understand enough about this, but you could ask someone who might?

LowMaintenance101 Sun 29-Oct-17 17:09:49

Definitely. Thank you all so much. Have a list of things to enquire about now. Great starting point.

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