Remortgage - Stamp Duty
Discussion
Anybody have a view on this?
Wife and I are remortgaging our home. It is currently in my name only and we're now adding her name too as part of the remortgage. We also own a flat (rental) in my name only.
The solicitor acting on behalf of the lender has advised us that my wife will need to pay stamp duty on her 50% of the existing mortgage. The existing mortgage is about 130k so there is approx 65k 'liable for SLDT. The solicitor is saying that my wife will have to pay this at the highest rate as there is a second property (not in her name though). Amounts to about £2k tax bill.
What seems odd/unfair is that the stamp duty bill treats my wife and I as two separate entities but the second property ownership considers us to be one 'entity'. Seems very inconsistent.
Our Financial Advisor's opinion is that we should not have to pay it. HMRC (unbelievably) could not say conclusively one way or the other. Solicitor is adamant that we should pay it.
Any thoughts?
Wife and I are remortgaging our home. It is currently in my name only and we're now adding her name too as part of the remortgage. We also own a flat (rental) in my name only.
The solicitor acting on behalf of the lender has advised us that my wife will need to pay stamp duty on her 50% of the existing mortgage. The existing mortgage is about 130k so there is approx 65k 'liable for SLDT. The solicitor is saying that my wife will have to pay this at the highest rate as there is a second property (not in her name though). Amounts to about £2k tax bill.
What seems odd/unfair is that the stamp duty bill treats my wife and I as two separate entities but the second property ownership considers us to be one 'entity'. Seems very inconsistent.
Our Financial Advisor's opinion is that we should not have to pay it. HMRC (unbelievably) could not say conclusively one way or the other. Solicitor is adamant that we should pay it.
Any thoughts?
Edited by Gad-Westy on Thursday 22 June 14:55
Gad-Westy said:
What seems odd/unfair is that the stamp duty bill treats my wife and I as two separate entities but the second property ownership considers us to be one 'entity'. Seems very inconsistent.
There was a very similar question a couple of weeks ago, although in that case the partner was being taken off the mortgage. SDLC was payable on half due to the partner giving up the debt. I guess the same applies to you - you're giving up half the debt.Of course in both yours and the other case you'd normally be below SDLC thresholds but they don't apply as in both cases there's another property involved. I think it's regarded as a bit of a glitch in the system but I suppose there's unlikely to be the outcry necessary for it to be corrected.
ETA: I mean SDLT of course - was thinking of a work acronym.
Edited by Sheepshanks on Thursday 22 June 13:15
KTF said:
Why is she being added to the mortgage? If there is no real reason for her to be, would it not be easier to leave her off to avoid this charge?
Various reasons, none of which now seem all that important in context of this bombshell. Had we been aware of this at the beginning we'd have taken a different approach I think. We have considered restarting the application. Sheepshanks said:
There was a very similar question a couple of weeks ago, although in that case the partner was being taken off the mortgage. SDLC was payable on half due to the partner giving up the debt. I guess the same applies to you - you're giving up half the debt.
Of course in both yours and the other case you'd normally be below SDLC thresholds but they don't apply as in both cases there's another property involved. I think it's regarded as a bit of a glitch in the system but I suppose there's unlikely to be the outcry necessary for it to be corrected.
Cheers. It does seem a little bit of unusual situation with little precedent thus far. I think I'm just irritated by the fact that my wife is considered to have a share in the flat as we're married but is now taking a share in the family home hence the SLDT. You would think she either has an existing financial interest in both or neither. Of course in both yours and the other case you'd normally be below SDLC thresholds but they don't apply as in both cases there's another property involved. I think it's regarded as a bit of a glitch in the system but I suppose there's unlikely to be the outcry necessary for it to be corrected.
It was my other thread recently where we're removing my wife from the deeds. My solicitor is still looking into it although the current status is that it is payable on half the outstanding mortgage. He hasn't got a clear view on whether it is payable when you simply remove someone from the deeds with the agreement of the current mortgage provider, but I think this will come out with the same answer.
Annoying yes, unintended glitch not sure. It does mean that moving assets between 2 married partners is costly but as the other reply stated, it's unlikely to end in uproar from the general public!
If we had a 20k mortgage, and decided to borrow another 150k, then there wouldn't be stamp duty payable, even though we have individually taken on extra mortgage. I don't quite see why we should pay just because there's a transfer of mortgage debt but it does seem to be the case!
Annoying yes, unintended glitch not sure. It does mean that moving assets between 2 married partners is costly but as the other reply stated, it's unlikely to end in uproar from the general public!
If we had a 20k mortgage, and decided to borrow another 150k, then there wouldn't be stamp duty payable, even though we have individually taken on extra mortgage. I don't quite see why we should pay just because there's a transfer of mortgage debt but it does seem to be the case!
SDLT is payable on property ownership. The mortgage is immaterial.
It's an interesting situation. As Sarnie says, you don't buy half a house.
In this case I'm assuming your IFA is coming from an angle that your wife has no other property. Your solicitor will be saying that your sole ownership will be nullified and a new joint ownership created which captures your other property, hence the enhanced rate.
It's an interesting situation. As Sarnie says, you don't buy half a house.
In this case I'm assuming your IFA is coming from an angle that your wife has no other property. Your solicitor will be saying that your sole ownership will be nullified and a new joint ownership created which captures your other property, hence the enhanced rate.
Just had a slooowww peak on the govt website - apologies, I'm on a Turkish beach - and it would appear that your wife may be already regarded as owning the properties as she is your spouse.
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
Jockman said:
Just had a slooowww peak on the govt website - apologies, I'm on a Turkish beach - and it would appear that your wife may be already regarded as owning the properties as she is your spouse.
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
It's the "release from debt" bit which catches these situations. https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
https://www.gov.uk/stamp-duty-land-tax
I wasn't aware of that, but it was pointed out by a solicitor in the other thread. It does seem very weird in the context of a married couple (or partners).
If you owned the house without a mortgage, you could gift half to your partner without there being any tax liability. I wonder what would stop you (assuming you had funds) settling the mortgage, giving half the house to your partner, then taking a new joint mortgage?
Sheepshanks said:
If you owned the house without a mortgage, you could gift half to your partner without there being any tax liability. I wonder what would stop you (assuming you had funds) settling the mortgage, giving half the house to your partner, then taking a new joint mortgage?
If you did that I wonder if you would need to make each transaction contingent on the others in contract and execute them all at once to do this without needing a bridging loan. Then does interlinking the legal bits bring it into the arena of tax avoidance legislation because the substance of the whole transaction is no change other than avoiding tax.paulrockliffe said:
If you did that I wonder if you would need to make each transaction contingent on the others in contract and execute them all at once to do this without needing a bridging loan. Then does interlinking the legal bits bring it into the arena of tax avoidance legislation because the substance of the whole transaction is no change other than avoiding tax.
If you needing a bridging loan then I guess it gets tricky. I was more thinking of the situation where someone might have the funds (some people do, but still keep their mortgage going) or perhaps where they could temporarily borrow from a family member etc.Gad-Westy said:
We have considered restarting the application.
How long would it take to do this (in terms of time/cost) compared to the £2k you are going to pay by continuing as is?Assuming it would be with the same provider it may not actually take very long to process. If the application requires income from both of you then it may not be so straight forward.
Sheepshanks said:
Jockman said:
Just had a slooowww peak on the govt website - apologies, I'm on a Turkish beach - and it would appear that your wife may be already regarded as owning the properties as she is your spouse.
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
It's the "release from debt" bit which catches these situations. https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
https://www.gov.uk/stamp-duty-land-tax
I wasn't aware of that, but it was pointed out by a solicitor in the other thread. It does seem very weird in the context of a married couple (or partners).
If you owned the house without a mortgage, you could gift half to your partner without there being any tax liability. I wonder what would stop you (assuming you had funds) settling the mortgage, giving half the house to your partner, then taking a new joint mortgage?
Well, just to wrap this one up several months later, in case it may benefit anyone else. Got a nice big refund cheque in the post at the weekend from HMRC. No real dialogue to share in terms of the reasoning. It's really just been a few months of requests of documents then long silent pauses until cheque arrived out of the blue.
Gad-Westy said:
Well, just to wrap this one up several months later, in case it may benefit anyone else. Got a nice big refund cheque in the post at the weekend from HMRC. No real dialogue to share in terms of the reasoning. It's really just been a few months of requests of documents then long silent pauses until cheque arrived out of the blue.
Interesting...I had a similar situation, albeit the reverse (removal of an ex GF from my main property). Because I already own another property, I was forced to pay the 3% SDLT on 50% of the mortgage balance (chargeable consideration) upon my remortage, despite buying the property 3 years ago.
Did they give you any reason whatsoever? I have been around the houses with HMRC on this one and because I've not actually sold my 'main 'residence', they believe I am not entitled to any relief.
n17ves said:
Gad-Westy said:
Well, just to wrap this one up several months later, in case it may benefit anyone else. Got a nice big refund cheque in the post at the weekend from HMRC. No real dialogue to share in terms of the reasoning. It's really just been a few months of requests of documents then long silent pauses until cheque arrived out of the blue.
Interesting...I had a similar situation, albeit the reverse (removal of an ex GF from my main property). Because I had already own another property, I was forced to pay the 3% SDLT on 50% of the mortgage balance (chargeable consideration) upon my remortage, despite buying the property 3 years ago.
Did they give you any reason whatsoever? I have been around the houses with HMRC on this one and because I've not actually sold my 'main 'residence', they believe I am not entitled to any relief.
Gad-Westy said:
n17ves said:
Gad-Westy said:
Well, just to wrap this one up several months later, in case it may benefit anyone else. Got a nice big refund cheque in the post at the weekend from HMRC. No real dialogue to share in terms of the reasoning. It's really just been a few months of requests of documents then long silent pauses until cheque arrived out of the blue.
Interesting...I had a similar situation, albeit the reverse (removal of an ex GF from my main property). Because I had already own another property, I was forced to pay the 3% SDLT on 50% of the mortgage balance (chargeable consideration) upon my remortage, despite buying the property 3 years ago.
Did they give you any reason whatsoever? I have been around the houses with HMRC on this one and because I've not actually sold my 'main 'residence', they believe I am not entitled to any relief.
How did you actually chase them? I wrote a letter which was subsequently ignored, and every phone I make ends with a different call centre numpty not knowing what the answer is.
n17ves said:
Much appreciated if you could.
How did you actually chase them? I wrote a letter which was subsequently ignored, and every phone I make ends with a different call centre numpty not knowing what the answer is.
Yep. Phone option was hopeless. Didn't get anywhere with that. Just wrote recorded letters. Crazy in 2017/18 but there you go. Will see if I can get something more helpful for you this evening. How did you actually chase them? I wrote a letter which was subsequently ignored, and every phone I make ends with a different call centre numpty not knowing what the answer is.
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