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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:
CamdenTowner · 10/12/2019 20:45

"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"

That only works if you've lived in the property you're selling (the rented out flat in the OPs case) in the 36 months prior to the sale. So do it this way you'd have to move into the rented flat (getting rid of the tenants first!), establish that as your main residence, then buy the new place, then sell the flat within 3 years. Then you'd get the extra 3% back.

momoney1 · 10/12/2019 20:45

You're married. Marriage is a legal contract and much of that contract is to do with finances. There are good reasons not to get married - for example if you don't want to be legally tied in a financial sense. Don't get married if you don't want this.

JoJoSM2 · 10/12/2019 20:47

www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#hr-notapply

To me it looks like there isn’t the 3% surcharge on the main residence, ie what you’re buying.

OP, the HMRC do webinars on stuff or you could give them a ring for guidance. Or speak to a tax accountant.

iMatter · 10/12/2019 20:48

Thanks @CamdenTowner

I had no idea Blush

Every day is a school day on MN Smile

ChristmasSpirtsOnTheRocksPleas · 10/12/2019 20:50

The higher figure is correct. They take both people into account when there is a marriage regardless of whose name is on the title deeds. The idea is to discourage couples from accumulating properties they don’t need.

ReceptacleForTheRespectable · 10/12/2019 21:13

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

There are tax reliefs for married couples (one party can transfer part of their personal allowance to the other in certain circumstances), and a bequest to a spouse is exempt from IHT, so no, married couples are not seen as totally independent of each other for tax purposes in all situations.

Alarae · 10/12/2019 21:17

Right. It sucks, but those are the rules. As a married couple, you are seen as a single unit for certain taxes. As well as Stamp Duty Land Tax, it is also the same for Capital Gains Tax (transactions between spouses) and Inheritance Tax.

If a married couple owns a property which is not being disposed of as their main residence and is worth more than £40,000, then they will be liable to and additional 3% of SDLT on a second purchase. There are other nuances to it, but realistically the basic answer is that you are stuck with the surcharge.

You will not be eligible for a refund of the surcharge as the flat is not your current main residence. If you were currently living in it but decided to let it and purchase your next property, while you would initially be liable to the surcharge you could apply for a refund if you sold it within three years of buying your new main residence.

For first time buyers relief, both spouses need to be first time buyers to get the exemption from SDLT. If one or you is not, the exemption will not apply.

For what it's worth, I work in tax with fancy letters after my name. Not specifically SDLT, but it is a common question that crops up.

icanhearapindrop · 10/12/2019 21:20

Sorry to jump in, but can anyone tell me, are you only a first time buyer if you have never owned a property before, or just if you don’t currently own one? It’s something I’ve always wondered.

KnickerBockerAndrew · 10/12/2019 21:23

It's to stop developing a buy-to-let culture where prices are pushed up so far by investment buyers, making homes unaffordable. They need to increase it IMO- 64% of my village are holiday lets. Sad

MiniMum97 · 10/12/2019 21:29

To people saying it's fair because they are married and HMRC view them as one unit I disagree. That only happens in certain situations. Married couples are taxed on income as a unit, they are treated as individuals.If it was done fairly and transparently you would either always be treated as a unit or always treated as individuals. That would be fair. This picking a choosing may be the law but it's certainly not a fair way of doing things.

Original poster
waterjungle · 10/12/2019 21:34

BHouse19 who advised us? An independent financial advisor who doesn't know his stuff apparently!! Then on top of that a solicitor who had to comeback and correct himself. Then finally HMRC who said they couldn't give us a definitive answer!

Thanks CamdenTowner you seem be saying what we are now being told. You have to pay top stamp duty if you are married to someone who has a property even it is only you buying it and you have never bought property before.

We are not trying to escape what we have to pay but the advice we got from various sources is so conflicting. We don't want to pay 1,000's more if we don't need to. We've had bad advice once that cost us a ton of cash we don't want to make that mistake again.

OP posts:
JoJoSM2 · 10/12/2019 22:25

On the HMRC website, there’s an interactive form you can fill out to check. I still don’t think the 3% surcharge is due.

CamdenTowner · 10/12/2019 22:34

JoJoSM2, not sure why you don't think it's due. Even the thing you linked to earlier was very explicit as to the circumstances. It says the higher rate doesn't apply to anyone will both use the property as their new main home AND has sold the last main home they owned before buying the new home. The latter is not the case for the OP so it is due.

JoJoSM2 · 10/12/2019 22:43

CamdenTowner, I know the OP isn’t disposing of her main residence because she doesn’t own one. But she isn’t keeping it either so I can’t see why she’d pay up.

It would mean that going from rented to first home you need to pay + 3% but if you have a portfolio of rentals and are moving for your own home and buying another, you wouldn’t pay. Surely that isn’t the intention of the rule.

SpinjitzuMaster · 10/12/2019 22:47

Afraid this is the case. We got 'stung' by this. We still own our first time and now rent it out - we've been in rented/staff accommodation for a few years. We then came to buy our current house (3x value of first house) and ended up having to pay the surcharge on our main residence (rather than the 'second home'). We moved out of the other house before the surcharge was introduced otherwise it might have influenced our planning.

It was a right pain but I try to focus on how lucky we are to own two homes.

Embracelife · 10/12/2019 22:56

she doesn’t own one.

She does she owns a flat
Which she rents out
But she still owns it

DexyMidnight · 11/12/2019 02:49

I know it's all too late now, but your husband shouldn't have disclosed your flat if he was buying in his sole name. Problem is a solicitor can't 'unsee' it.

I'd get a new solicitor and start again tbh.

DexyMidnight · 11/12/2019 03:29

Oh dear if you've told HMRC ignore my advice. Genie is out the bottle now

CircleofWillis · 11/12/2019 07:31

Dexy surely not disclosing would be fraud and therefore a criminal action?

ReceptacleForTheRespectable · 11/12/2019 07:41

Yep. Its tax evasion if the non-disclosure is deliberate.

Dexy sounds like a lovely person Hmm

Patte · 11/12/2019 08:00

If HRMC want to tax you on your house because you're married, why can't I use more than 10% of my husband's tax free allowance?! We're one unit when it gets them money and two when it loses us money! (And I'm not even in the OP's situation; I just dislike unfairness and inconsistency.)

Original poster
waterjungle · 11/12/2019 10:14

We have had suggestions of putting the flat into a limited company but I don't think there is enough time to do that and keep the house we have offered on.
The flat is actually worth about 1/3 of the price of the house. It is a small one bed I bought when you could get 100% mortgages. My nanna died and left me about £3000 that she said she wanted me to use to get some property. If we could live in it we would but I have 2 kids!
Like I said even solicitors seem to be confused by the rules, HMRC wouldn't give us a straight answer either.

OP posts:
DexyMidnight · 11/12/2019 12:48

How would it be fraud?

Do you or have you ever owned any other properties in the UK or elsewhere in the world? No

Will the purchase be solely in your name? Yes

Job done, no fraud

Mildura · 11/12/2019 12:52

even solicitors seem to be confused by the rules

Something that is really quite astonishing!

It's hardly an exceptionally complex scenario.

user1487194234 · 11/12/2019 13:09

To PP Yes you can have a 100 BTLs and if you move from your main residence to another main residence you don't pay it

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