Stamp duty ... arrrggghhh

[leebuchanan]

So ... I'm in the middle of re-mortgaging my flat. The flat is currently in my name, but with the re-mortgage its going to be changed to be in the name of my wife and I. I've just been landed with a large stamp duty bill (50% of the stamp duty on the mortgage amount) for putting half of the flat in my wife's name

Is the govt taking the p1ss or what?

IMHO stamp duty is one of the taxes which I find hardest to stomach, along with inheritance tax, both of which are unjustifiable.

Anyone care to take the govt's side on this one?? Thought not ...

Lee

[mybrainhurts]

Institutional theft......

[JonRB]

Tell your wife that if it is so important for her to have her name on the deeds then she should take out a personal loan to pay for the Stamp Duty.

(I'm assuming that you've had a 'discussion' where she has told you it is 'only fair' that her name is on the deeds as well since she is now your wife )

[pdV6]

How about leaving it in your name and drawing up a will that bungs it to her? I'm guessing you'll not be in a flat forever; leave the joint names stuff until your next move.

[leebuchanan]

Unfortunately one of the reasons for it going into both of our names is that with the re-mortgage, we are taking some equity out of the flat, and I've had to use her salary as well as mine to get a joint mortgage.

So its my own fault ... just cant see how it can be justified that I'm being charged twice for stamp duty ...

[rude-boy]

Take it you've a mortgage over £120k then.

Sorry but there is no way out and all I can do is offer you my sympathies.

As I said at the end of my last posting on a similar threat - Welcome to the wonderful world of Gordon & Co.

[leebuchanan]

Yup. Suckered by Brown again. Even the bloke on the phone at the inland revenue said that its seemed unfair!

[rude-boy]

anonymous said:

[redacted]

I knew there was a reason you earnt more than me

That would work but it seems that part of the deal from her side is that she wants her name on the deeds. She might be sated by a declaration of trust though...

[rude-boy]

anonymous said:

[redacted]

Sorry if this goes over anyone's head but:-

They're not an afront to the mortgagee if you advise them of the existance of the dec. Halifox okayed one last year without question where the beneficiary was not a registered prop. It was only £14k though.

Another, think it was the old listening bank, were happy provided the beneficiary signed a deed of consent and posponement so as to give them priority over the unregistered interest should they make a further advance.

Having said that the Big Church didn't like it but they were prepared to allow the intended beneficiary to secure their interest by way of a second charge.

PS Tonka I hope when you put her on it was as TIC on the terms of a Dec which in turn stated that from the net proceeds you were to receieve the first £X to the then value of your equity and thereafter it was to be 50/50 or whatever.


>> Edited by rude-boy on Thursday 20th January 19:45

[leebuchanan]

Rude-boy & Tonker - thanks for the comments. Either of you got any advice for me - I intend to get my IFA to call the lender and ask whether they require my wife to be on the deeds of the property, or whether she can simply act as a guarantor.

Anything else that I could say to save myself the bill??

[JonRB]

leebuchanan said:

I intend to get my IFA to call the lender and ask whether they require my wife to be on the deeds of the property, or whether she can simply act as a guarantor.

Sounds the best way forward.

How does your wife feel, incidentally?

[rude-boy]

leebuchanan said:

Anything else that I could say to save myself the bill??

Sorry can't think of anything else really.

If you are really close to the £120k mark you could see if you could get away with borrowing £119,500 and borrow the rest on a CCA loan - more expensive in the long run but might be cheaper in the short term than paying £600+ in SDLT.

If you are thinking of moving in the next few years the above would work as you could consolidate the debt when you move.

[Racylady]

Not sure if this is right but my understanding was that stamp duty was payable on consideration and, when there is a transfer of equity, it will be for the assumption of debt from the ‘old’ mortgage that is being paid off on the remortgage. So, surely, if, for example, the ‘old’ mortgage was, say, £200k, and the property was transferred into joint names in equal shares, the assumption of debt would be £100k, thereby attracting stamp duty of a grand.
So (bear with me, I do have a point!), if you transfer it as Tenants in Common in unequal shares so that the assumption of debt is less than £60k (30% in my example), hey presto! no stamp duty.
Not sure if that’d work though…..

[pdV6]

Racylady said:

So (bear with me, I do have a point!), if you transfer it as Tenants in Common in unequal shares so that the assumption of debt is less than £60k (30% in my example), hey presto! no stamp duty. Not sure if that’d work though…..

Sounds like a good 'un. Can't see the wife being too happy with an unequal share, though!

[Racylady]

But it wouldn't matter because, in divorce proceedings (if it ever came to that ), it's still a matrimonial asset and the Court has the power to vary any shares held anyway!

[leebuchanan]

Racelady - thanks. Will try the 'tenants in common' idea with the lender, via my IFA. Sounds very plausible to me. Definitely worth a try, and better than further lining Brown's pockets

[james_j]

MM, stamp duty hasn't kept up with the inflation of the item it is taxing, i.e. houses, so in effect it has been increasing greatly.

Just one to add to the 75 ish new or increased taxes introduced by Labour since 1997.

[rude-boy]

Racylady said:

...if you transfer it as Tenants in Common in unequal shares so that the assumption of debt is less than £60k (30% in my example), hey presto! no stamp duty. Not sure if that’d work though…..

You might think it should work like that but afraid it's not the case. The consideration is being a party to the new mortgage, not assiting in paying off the old mortgage. As a party to the new mortgage the IR's line is that, regardless of who makes the payments and what the equity split is, you are equally responsible for the debt and therefore your consideration is assuming half the debt on the new mortgage.

[Racylady]

But if that's true, why don't people who take out these 110% mortgage thingey's pay more stamp duty than the purchase price?

[rude-boy]

Racylady said:

But if that's true, why don't people who take out these 110% mortgage thingey's pay more stamp duty than the purchase price?

Because the duty is based on the consideration paid to the transferor - if you are having a 110% mortgage, apart from needing you head looking at IMO, you are still only paying the transferor the purchase price of the Property. The other 10% is used to pay for the legal fees and disbursments, such as the stamp duty, together with any envisaged improvements usually.

What we are talking about here is not the purchase of a property but a transfer of equity linked to a re-mortgage. In this case the revenue would consider the consideration wife is making, in return for the transfer of a share in the property to her, is equivilent to half the mortgage debt.