To ask how to avoid 2nd home rate stamp duty

[Stampdutywoes]

Hear me out before you attack.

Currently living in rental property after splitting with ex partner. We own the home he is living in jointly.
The landlord of my rental wants to sell and I would like to buy it but the additional 5% stamp duty rate for what would count as a second home is a killer.
Are there any conveyancing solicitors who could advise on how to avoid (not evade) this extra 5%?

So he buys you out?? This sounds utter madness in a divorce scenario. I assume retaining 50% of the initial house is because you think its going to rocket in value?

We aren’t married and we don’t know how much it is worth without selling it and he doesn’t want to sell it

Doesn't want... not the same as a 'killer'.

If he can find 400K he can find 405K.

If just all smacks of wildly priviledged wanting to avoid paying in. And the whole 'decent, hardworking...'. We all live in the world. We know that being decent and hardworking doesn't mean everyone gets a couple of million quid houses.

Why can't he take out a mortgage in order to buy you out? Since it's his choice to stay in a house he can only afford half of? He may not want a mortgage but they're the reality for most people who don't have the wads of cash they'd like to have. You're being very defensive but actually I think you're putting yourself in a very vulnerable position, paying extra SDLT and potentially extra CGT in due course all because he likes the house he's in even though he can't afford it. Consider the possibility that people here are actually trying to look out for you.

"There might be rules against this..."

No shit

Erm its called a valuation? Doesn't matter is he doesnt want to sell, he either buys you out for 50% or you sell and split it.

This scenario seems quite dodgy tbh.

Fair enough. I’m pretty financially savvy and won’t put myself in a vulnerable position.

Will you still be happy to have your money tied up in his house when he moves a new partner in?

Won't you mind that any improvements you make to your house he will get half the value of one day? Likewise if he fails to maintain his property the value of your investment could fall.

If he doesn't insure his house and it burns to the ground the value will be decimated. Will you be involved in insuring it to make sure it is always insured? That's a lot of involvement and aggravation for ex's I would think.

It’s an odd beast of a house and only worth what someone is prepared to pay for it. Estate agents are infamous for over valuing property to get it on their books so we can’t trust their valuations

Aside from the SDLT thing ...

I haven't read the whole thread ... but presume other people have flagged that co-ownership with a former partner as a long term thing is bonkers!!

I say that as a former real estate solicitor. How do you deal with insurance, repairs, capital improvements, him moving in a new partner, he fails to maintain property or causes damage, improvements paid for by him that increase (or decrease) value, death, wills - you are mad to consider this.

Fair points

Well, what is he prepared to pay for it?

And doesn’t council tax double on a second property?

Don’t be ridiculous- they have to ID people and so do we (solicitors).

Not sure if you each live in one property

He likes it there, He doesn't want to take on a mortgage and He doesn't want to sell. Why is everything being dictated by him? Are you so powerless that you're not demanding your fair share of that property?

Why are you agreeing to letting him live in a house you co-own when you can't afford to buy your own without his help? What is the reason why you haven't demanded that the house be valued and either he buys you out (however he does it, even if he doesn't "want" a mortgage) or you sell the house and split the profits, with him finding somewhere else he "likes" to live?

That's not how RICS paid valuations work ...

You are conflating the figures an estate agent may give you when you when trying to win your instruction with proper valuations that show comparables and price per square feet etc.

If you continue your co-ownership you will need a deed of trust document that details what happens in the event of dispute that you can not agree on. Funnily enough the only answer to that is ... three paid valuations, put it on the market at the average price and its disposed of.

As the non-resident co-owner you would be in a hugely vulnerable position.

Unfortunately if there were ways around applying the second home additional tax, it would likely be abused by those wealthy holiday home owners you are referring to.

There are many people in less fortunate positions than yourself affected by the additional tax, those that have helped by property for struggling family members, inherited a property they can't sell for various reasons.

Owning half of two properties is also exactly what the majority of property owners with 2 houses would say........whether or not they actually live or stay in both.

Well if AI says so then it’s true. 🙄

You can’t deduct stamp duty on a main residence CGT calculation - they are both main residences if someone is living there so no deduction.

I’m pretty financially savvy

Are you?

This arrangement could also affect inheritance tax so I’d take advice on that too @Stampdutywoes

Plus council tax on second homes potentially

Then you have two homes on paper so you pay the stamp duty

I find it astonishing that you think because you only own “half a house each”, you can avoid it being a second home. If you were not separating, and you bought another house together, you would both be buying a second property.

I also resent people who think because their “hard work” bought their home that they are more entitled to pay no tax than those who inherited, or were gifted a second property. There are cleaners and nurses and healthcare assistants and care workers and many others who work very hard, frequently in more than one job. Arguably they work harder than anyone because they don’t have financial advantages, and they might never be able to buy even a share of a property.

It isn’t about hard work. It’s about people paying their fair share. If you don’t want to pay the stamp duty, get him to buy you out. I’m sure his hard work will pay off any resulting mortgage in no time.

You're really coming across nastily in your childish responses. Yes, you've got flack for asking, perhaps unfairly, but you'll don't need to strike back. No need to make yourself look like a total knob just because you're irked.

OP, consider carefully what would happen to your “second” property if he got married and then divorced, or died or became bankrupt. You could lose your home.