Stamp Duty Question

[T6 vanman]

OK ... I've received two separate pieces of advice ...
Scenario .. My son (living at home - not a property owner) has an option to purchase a property (His First).
The property (currently rented) is valued at £220k but he is being gifted half the property so only purchasing for a sum of £110k,
His intention is to still live at home and continue to let the current tenants rent .. (they intent to stay for maybe for 5 years)
His solicitor has sent some documents through for signing including a list of their likely charges (not requiring signing)...
These likely charges include Stamp Duty @ 4% (£8.8k)

I have spoken to a property solicitor on an unrelated issue and just asked for advice and they stated as he is a FTB & the purchase is below £125k that the stamp duty rate is zero.

I think the first solicitor may have sent the likely charges page assuming my son already had a property ???

So over to the collective .. what is my sons Stamp Duty liability?

TIA

[barryrs]

Im with the first solicitor as I think HMRC will treat the gifted half as “consideration” in the transaction.

[T6 vanman]

Thanks ^^

I've been tinternet exploring and have reached three answers
https://www.stampdutycalculator.org.uk/#section2


1: Stamp Duty for first time buyers
A permanent change to the initial stamp duty threshold for first time buyers means that anyone buying their first home won't be liable for stamp duty if the purchase price is below £300,000.

2&3:


2: If purchase price is what my son pays (£110k) then zero
3: If purchase price is property value (£220k) then 2% (£4.4k)

Still confused and still no where near the original solicitors £8.8k

[ARHarh]

No idea but thought you could only be classed as a first time buyer if buying to live in, not buying as a business.

[T6 vanman]

He's not buying as a business ... only as an individual ... He may move out and live in the house when the tenants move out ..
The tenants are known and reliable & indicate they intend to stay for a few years

[tonyvid]

But, surely, it will be classified as a buy-to-let rather than his primary home as he's clearly not going to be living there at time of purchase?

[CharlesElliott]

He is not eligible unless it is going to be his primary residence. See Part 4 of the Finance Act 2003 (as amended).

(4)The third condition is that the purchaser, or (if more than one) each of the purchasers, is a first-time buyer who intends to occupy the purchased dwelling as the purchaser's only or main residence.

Also note that the 'gifter' may be subject to CGT on the property, given it is not their primary residence, based on the market value of the property, and not just the 50% they are selling.

Edited by CharlesElliott on Tuesday 5th July 14:58

[knk]

SDLT is on the value of the purchase (edit - that excludes the amount gifted as long as there is no mortgage) and the FTB relief is only available when buying to occupy as their sole residence.

Sorry.

Edited by knk on Tuesday 5th July 16:29

[T6 vanman]

Thanks ....
But what is my sons liability to SDLT ... as opposed to is my son a liability

CharlesElliott said:

Also note that the 'gifter' may be subject to CGT on the property, given it is not their primary residence, based on the market value of the property, and not just the 50% they are selling.

The gifting comes from someone who has inherited half the property gifting to my son, .. so I guess doesn't apply in this occurrence.

[CharlesElliott]

Your son will not be eligible for First Time Buyer relief......so will pay at the normal rate which as part of the property is a gift will depend on whether there is a mortgage on the property or not.

On the CGT question, the seller of the 50% will be liable based on the increase in value, the gifter who inherited the property would be liably on the difference between the value declared in the estate (ie probate value) vs the current market value.....which may be the same if the inheritance is a recent one.

[ARHarh]

T6 vanman said:

He's not buying as a business ... only as an individual ... He may move out and live in the house when the tenants move out ..
The tenants are known and reliable & indicate they intend to stay for a few years

But as I suggested renting out a house is a business, liable to all taxes etc. Just because he might live there in the future does not stop it being a business.

[JQ]

T6 vanman said:

I have spoken to a property solicitor on an unrelated issue and just asked for advice and they stated as he is a FTB & the purchase is below £125k that the stamp duty rate is zero.

I would be double checking any other advice this solicitor is providing to you.

[T6 vanman]

JQ said:

T6 vanman said:

I have spoken to a property solicitor on an unrelated issue and just asked for advice and they stated as he is a FTB & the purchase is below £125k that the stamp duty rate is zero.

I would be double checking any other advice this solicitor is providing to you.

But they've come in with a nice low quote for what I want them to do

[snotrag]

knk said:

SDLT is on the value of the purchase (edit - that excludes the amount gifted as long as there is no mortgage) and the FTB relief is only available when buying to occupy as their sole residence.

Sorry.

Edited by knk on Tuesday 5th July 16:29

Yep, ita a buy to let.


(Kick him out, tell him to get a lodger to help with the payments, thats tax free! When he can afford it on his own or gets a Missus moved in, sorted!).