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Original poster

Stamp Duty Bombshell

77 replies

waterjungle · 10/12/2019 19:24

Hopefully this is the right place to ask question but I suspect we are royally screwed.
We have just had our offer accepted on the house we want and AIP for our mortgage granted.
It is going to be just my husbands name I the mortgage. I have a flat that I bought before we were married that is rented out and has never been lived in by me.
Husband never owned a property before and us a first time buyer.
We have always lived in rented.
We were told he would get relief on Stamp Duty as a first time buyer. Our solicitor has come back today and said actually NO. He will be charged £18,000 as it is seen as a second home.
Like most people, we don't have a spare 18,000. This means we will loose the house we have offered on.
The flat I own is in negative equity so I can't sell.
Opinions on just how buggered we are?

OP posts:
stripeypillowcase · 10/12/2019 19:30

sorry, that's the rules.

stupid question probably: can you live in the place you own?

kjhkj · 10/12/2019 19:32

well you can sell the flat, even if it is in negative equity it might be cheaper to do that and to make a loss than to pay that amount of stamp duty on the house

OrangeHue · 10/12/2019 19:33

Is the flat in your husbands name or solely yours? And is the house solely in your husbands name? If so, I don’t see how it can be classed as your husband having a second property but then again I don’t know enough about it.

ReceptacleForTheRespectable · 10/12/2019 19:34

It is a second home though isn't it? Negative equity or not, you already own a property. The only reason for getting the mortgage in your DH's name only is because you already knew this and wanted to get around it, wasn't it?

ReceptacleForTheRespectable · 10/12/2019 19:35

No matter whose name it is in, a house they buy while married and then live in together will be a marital asset.

GreenBasket · 10/12/2019 19:38

You've been caught out - that's hardly a bombshell! As PP said, sell your other property if it's not suitable for you to live in.

orangeteal · 10/12/2019 19:39

Is it the second property or is the value of the house you're buying over the threshold for no stamp duty for first time buyers? If neither of you are named on each other's property or mortgage I don't understand the second property element.

GreenBasket · 10/12/2019 19:40

There's no such thing as "first time owner-liver-inners" and you've already been a first time buyer when you bought your flat!

dimsum123 · 10/12/2019 19:43

Your DH is buying the house in his sole name and he is a first time buyer. I'd get your solicitor to double check that or do a bit of research yourself.

ConstanceL · 10/12/2019 19:46

There was an problem page article about this in the Guardian not so long ago and the upshot wad that if you are married to a homeowner you are not a first time buyer, something to do with it being a marital asset. Sucks, but there you have it. Also it's irrelevant you've never lived in your flat - you are still a homeowner even if it's never been home.

JoJoSM2 · 10/12/2019 19:56

Is it 18k incl the additional property surcharge? You shouldn’t have to pay that as you’re buying a home and not a btl/holiday home.

ReceptacleForTheRespectable · 10/12/2019 20:02

You tried to fiddle the rules, you got caught. It's fair.

Hk24498 · 10/12/2019 20:05

For stamp duty purposes a married couple, or civil partners, are classed as one unit by HMRC. So, if one owns a buy-to-let property and the other buys a property the second home stamp duty rate still applies.It isn't fair but those are the current rules.

Maybe get divorced?! (joking, although I have had one client seriously consider this!)

I do think conservatives may change the current rules in the next budget if they remain in power - or that may be wishful thinking, the past few years the rules seem to have gotten more and more complicated.

Pipandmum · 10/12/2019 20:08

@JoJoSM2 it doesn't matter what the property is being used for the tax is on an additional property.

ReceptacleForTheRespectable · 10/12/2019 20:09

It's totally fair! Married couples are seen as a unit for IHT purposes, when it benefits them. So they can hardly argue about also being seen as a unit when it doesn't benefit them. Swings and roundabouts - the principle is consistent though.

Original poster
waterjungle · 10/12/2019 20:12

Thanks everyone - as most of the replies here show there seems to be confusion. We've had conflicting advice from various solicitors today quoting our Stamp Duty at various prices between about 2.8 and 18k.
We've consulted 3 solicitors and each have given us a different figure - and all have said they are not too sure.
The mortgage was going to be in my husbands name as we relocated after my maternity leave and I am still trying to find work down here (my job was very specific).
I could sell the flat although by the time that happened we would have lost the house anyway.
The gist seems to be that even though DH is a first time buyer he looses that advantage as he is married to me and I am not. Even though my name will not be on the mortgage and the house will be held solely in his name.
It's just a gut punch as it means we have been looking at stuff we cant afford.
We are going to have to start looking again at different stuff and may have to put the whole thing on hold for a year and waste money on rent. We have until January to apply for schools for my 3 year old and moving or not will obviously affect those decisions. It's a bit gutting as we were led to believe one thing it seems we were given duff advice.

OP posts:
HermioneMakepeace · 10/12/2019 20:15

Why are you not putting your name on the mortgage?

baffledbeyondbelief · 10/12/2019 20:16

I'm afraid it will be classed as a second property, I was in the same situ. You can claim it back if you sell the flat within 3 years although that doesn't help if you don't have the cash now.

BHouse19 · 10/12/2019 20:19

@dimsum123 it's because they're married

BHouse19 · 10/12/2019 20:21

@waterjungle who on earth was advising you?

snowballer · 10/12/2019 20:30

If you can find the money for the stamp duty from elsewhere, I'm fairly sure that you get it refunded if the second home is sold within a certain timeframe, you'd have to look into the details of it though

iMatter · 10/12/2019 20:38

I'm confused

Is the new house in his sole name?

Is the mortgage in his name only?

If yes to both why on earth is it a second home for him?

Are you saying that if you live with someone who has never owned a property before but you have, then the person you live with is liable to pay extra tax because of something you did/own?

iMatter · 10/12/2019 20:40

People (even married couples...) are individuals for tax purposes, surely

CamdenTowner · 10/12/2019 20:40

It seems like you've been given some bad advice. Some of the advice on here seems to be coming from people who don't know the rules either.

There are two things at play here. First, tax relief on SDLT for first time buyers. As a married couple you have to both be first time buyers. You're not, so you lose that. Nothing to do with whose name is on the mortgage for the property or the old one.

Secondly, if you buy a property when you (as a married couple) already own another, as you do, then you are liable for the second home SDLT, which is at a higher rate than normal SDLT - an extra 3%. This doesn't apply if the new home is replacing an existing home which you live in and you intend to live in the new one. You rented, so this doesn't apply to you unfortunately.

So you're screwed both ways - not only do you not get first time buyers' relief, you have to pay the second home rate on your new property.

CamdenTowner · 10/12/2019 20:42

"Are you saying that if you live with someone who has never owned a property before but you have, then the person you live with is liable to pay extra tax because of something you did/own?"

Not someone you live with, but someone you're married to, yes.

"People (even married couples...) are individuals for tax purposes, surely"

Nope, not in regards to stamp duty at least.

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