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Original poster

Stamp duty refund on second home?

11 replies

Gwythr · 21/08/2018 22:30

I will try not to waffle and ramble with my question to you fine mumsnet members regarding stamp duty..

A number of years ago I bought a house with my brother, which we both lived in for a time.

My brother has since become engaged and bought a house with his fiance. The bank wouldn't let me have the mortgage on my own due to "affordability", so my brother kindly agreed to stay on the mortgage with me.

As you can't have two main residencies, his new house was counted as a second home and incurred stamp duty charges of £7000+.

In normal circumstances of second homes, if their sold within a certain time period, stamp duty refunds can be made?

If I have my brother removed from my mortgage, will he be refunded the £7k?

I am now earning more money than previous and my fixed rate mortgage is up for renewal..

Any advice would be much appreciated..
Thanks in advance

OP posts:

Saggital · 21/08/2018 22:58

It is the fact that he has bought a second interest in a residential property that is the issue.

Original poster

Gwythr · 22/08/2018 12:52

I know WHY he has to pay stamp duty.. I'm asking if he is taken off my mortgage would he be eligible for a rebate?

As he would be reverting to having one residency

OP posts:

jusdepamplemousse · 22/08/2018 12:58

He can apply for a refund of the higher rate element if it’s within 3 years of his purchase.

Original poster

Gwythr · 22/08/2018 13:30

Thank you for your reply..

Does the 'higher rate' refer to percentage of cost of the new property he had to pay to hmrc?

OP posts:

jusdepamplemousse · 22/08/2018 14:34

It applies to the additional SDLT payable due to the higher rate being levied as it was a second residence. He can apply for the difference between what he would have paid had it been his only residence and what he actually paid.

Saggital · 22/08/2018 15:55

The mortgage is a red herring. He has two interests. That’s enough.

Silentnighttwo · 22/08/2018 16:04

It’s not the mortgage that’s the issue for SDLT, it’s the ownership. I’m guessing your DB’s name is on the deeds of your house?

My understanding is that if main residence is sold within 2 years then refund applies. So if he sells his interest to you then he may be able to apply for a refund of the additional £7,000.

However, if you effectively buy your DB out then (1) he may be liable for CGT; and (2) you may be liable to pay SDLT on his half when you acquire it.

I’d recommend getting legal advice.

jusdepamplemousse · 22/08/2018 16:25

Clearly OP is referring to buying out her brother’s interest when she says having him removed from the mortgage.

(No lender would advance on the strength of a mortgage given by only one of two owners.)

Original poster

Gwythr · 22/08/2018 20:45

No money will be exchanged, when my brother is removed.

It's a long story, but thanks to help from our parents, it will just be a case of convincing our lender I'm capable to pay on my own and pay a solicitor to remove him from the land registry?

OP posts:

Saggital · 22/08/2018 22:54

He might want to argue he has been a nominee if he takes no financial profit in the property.

howwillthispanout · 23/08/2018 10:09

Hi OP

I've found the Q and A here helpful - and the discussion at the foot of the page has been incredibly helpful.

www.zoopla.co.uk/discover/buying/q-a-new-3-stamp-duty-surcharges/#g8E6hsapbByxrjhK.97

John Shawcross is an expert on the new stamp duty rules and exemptions and is very happy to respond to queries.

Hope this helps

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