Let to buy questions

[Fergie87]

Hi all, my wife and I are in the process of buying a new house and trying to sell ours. Selling has proven quite difficult having sold our house twice, only to have both buyers pull out. We have been looking at let to buy but have ended up having more questions than answers.

I cant find a difinitve answer on how the stamp duty will be calculated on the new house as it is still our main residence. Ideally we would like to keep the current house but move it into my wifes name and have the new house in mine. Is this possible?

Thanks
Fergie

[TooLateForAName]

If the question is 'Can we avoid the stamp duty by having one house in each partners name?' then the answer is : No,

[Sarnie]

Fergie87 said:

Hi all, my wife and I are in the process of buying a new house and trying to sell ours. Selling has proven quite difficult having sold our house twice, only to have both buyers pull out. We have been looking at let to buy but have ended up having more questions than answers.

I cant find a difinitve answer on how the stamp duty will be calculated on the new house as it is still our main residence. Ideally we would like to keep the current house but move it into my wifes name and have the new house in mine. Is this possible?

Thanks
Fergie

Is it possible? Yes.

Although I assume the next question is going to be "Can we avoid the extra 3% Stamp Duty?".............

[Sheepshanks]

Fergie87 said:

I cant find a difinitve answer on how the stamp duty will be calculated on the new house as it is still our main residence.

I think it's pretty clear - if you (and that means husband and wife, or partners) end up with two houses then you pay the higher rate. You could get it back if you sell the first house within 3yrs.

If you already owned two houses and were selling you main residence then you wouldn't pay it. But as you're thinking of retaining your current main residence even this wouldn't apply to you.

[Fergie87]

I dont want to avoid stamp duty. Paying that doesnt bother me but what does is the 40% I would pay on any rent where as my wife would only need to pay 20%.

[Sarnie]

Fergie87 said:

I dont want to avoid stamp duty. Paying that doesnt bother me but what does is the 40% I would pay on any rent where as my wife would only need to pay 20%.

Then the answer is yes, as long as your wife and the property meet the LTB criteria.......and you meet the criteria for the onward purchase...

[Kwackersaki]

Fergie87 said:

I dont want to avoid stamp duty. Paying that doesnt bother me but what does is the 40% I would pay on any rent where as my wife would only need to pay 20%.

We've just been in exactly this position. I'll try and dig out the links when i get home but basically you make a declaration of trust whereby you gift a % (as little as 1%) of the exisitng property to your partner (our house was in my name only at the time and mortgage free), you then make a decalration for the benefit of the HMRC that all rental income will go to your partner for her sole use. All rental income then is then taxed at her rate not yours.

We had it all drawn up by a solicitor and accountant for a few hundred quid.

We were also going to sell because of the additional stamp duty but our advisor said to think long term and the rent from this more than pays of the mortgage on the new place.

[Fergie87]

Kwackersaki said:

Fergie87 said:

I dont want to avoid stamp duty. Paying that doesnt bother me but what does is the 40% I would pay on any rent where as my wife would only need to pay 20%.

We've just been in exactly this position. I'll try and dig out the links when i get home but basically you make a declaration of trust whereby you gift a % (as little as 1%) of the exisitng property to your partner (our house was in my name only at the time and mortgage free), you then make a decalration for the benefit of the HMRC that all rental income will go to your partner for her sole use. All rental income then is then taxed at her rate not yours.

We had it all drawn up by a solicitor and accountant for a few hundred quid.

We were also going to sell because of the additional stamp duty but our advisor said to think long term and the rent from this more than pays of the mortgage on the new place.

Thanks for the reply this is exactly the info I was after as our mortgage is solely in my name. The links would be very much appreciated.

[red_slr]

Fergie87 said:

I dont want to avoid stamp duty. Paying that doesnt bother me but what does is the 40% I would pay on any rent where as my wife would only need to pay 20%.

I think you need to speak to an accountant really as its not quite that simple.

[red_slr]

Oh and talk to Sarnie, top bloke

[Sarnie]

red_slr said:

Oh and talk to Sarnie, top bloke

[kingston12]

Fergie87 said:

Hi all, my wife and I are in the process of buying a new house and trying to sell ours. Selling has proven quite difficult having sold our house twice, only to have both buyers pull out. We have been looking at let to buy but have ended up having more questions than answers.

I cant find a difinitve answer on how the stamp duty will be calculated on the new house as it is still our main residence. Ideally we would like to keep the current house but move it into my wifes name and have the new house in mine. Is this possible?

Thanks
Fergie

I think you are actually talking about income tax on your rental income rather than Stamp Duty.

You won't pay any Stamp Duty on your old house at all, but you will pay an extra 3% on your new house, which you will get back if you sell the original one within three years.

You will have to pay income tax on your rental income at whatever rate you pay tax on your other income. You could transfer it into your wife's name, but I'd definitely seek advice from a professional before doing that!

I am sure you have taken this into account, but it is worth noting that some people refer to 'Let to Buy' as becoming an 'Accidental Landlord'. A lot of free maony has been made doing this over the past decade of booming house prices, but IF this doesn't continue would it cause you a problem? If your house has proved difficult to sell in this market, it might be evne more difficult to sell if the market gets worse? Are you in a position to deal with extended void periods?

[Kwackersaki]

Fergie87 said:

Kwackersaki said:

Fergie87 said:

I dont want to avoid stamp duty. Paying that doesnt bother me but what does is the 40% I would pay on any rent where as my wife would only need to pay 20%.

We've just been in exactly this position. I'll try and dig out the links when i get home but basically you make a declaration of trust whereby you gift a % (as little as 1%) of the exisitng property to your partner (our house was in my name only at the time and mortgage free), you then make a decalration for the benefit of the HMRC that all rental income will go to your partner for her sole use. All rental income then is then taxed at her rate not yours.

We had it all drawn up by a solicitor and accountant for a few hundred quid.

We were also going to sell because of the additional stamp duty but our advisor said to think long term and the rent from this more than pays of the mortgage on the new place.

Thanks for the reply this is exactly the info I was after as our mortgage is solely in my name. The links would be very much appreciated.

Hopefully these should help. I have a few more if not. Jus to add, we changed the ownership details with the land registry as our solicitor was wary of it as he hadn't heard of this before. Reading through though it shouldn't be necessary.

http://www.taxlandlord.com/tax-saving-trust-declar...

http://www.property-tax-portal.co.uk/taxquestion24...

http://www.taxationweb.co.uk/forum/rental-income-t...

http://www.property-tax-portal.co.uk/property_tax_...

Edited by Kwackersaki on Tuesday 24th January 17:54

[Fergie87]

Kwackersaki said:

Hopefully these should help. I have a few more if not. Jus to add, we changed the ownership details with the land registry as our solicitor was wary of it as he hadn't heard of this before. Reading through though it shouldn't be necessary.

http://www.taxlandlord.com/tax-saving-trust-declar...

http://www.property-tax-portal.co.uk/taxquestion24...

http://www.taxationweb.co.uk/forum/rental-income-t...

http://www.property-tax-portal.co.uk/property_tax_...

Edited by Kwackersaki on Tuesday 24th January 17:54

Thanks very much

[pattyg]

My advice would be not to own 2 houses and get into the BTL market unless you can pay the relevant tax without some kind of fiddle going on.

Celebrities seem to get a lot of flack about tax evasion schemes but the man in the street seems to also jump at the chance of saving a few quid from HMRC when in the position to do so.

[Fergie87]

pattyg said:

My advice would be not to own 2 houses and get into the BTL market unless you can pay the relevant tax without some kind of fiddle going on.

Celebrities seem to get a lot of flack about tax evasion schemes but the man in the street seems to also jump at the chance of saving a few quid from HMRC when in the position to do so.

I don't care what anybody else does, especially celebrities.

[Kwackersaki]

pattyg said:

My advice would be not to own 2 houses and get into the BTL market unless you can pay the relevant tax without some kind of fiddle going on.

Celebrities seem to get a lot of flack about tax evasion schemes but the man in the street seems to also jump at the chance of saving a few quid from HMRC when in the position to do so.

Eh? It's avoidance not evasion, all legal and above board.