Stamp duty when buying a portion of a property

[996c2]

I am thinking of buying a one third share of a commercial property that is worth in total £675,000. I would be paying £225,000 for the one third share of the property. Two other parties share ownership of the remaining 2/3 of the property equally and separately.

Does anyone know what rate of stamp duty I would have to pay in this transaction? Would it be 1% (below the £250k threshold) or 4% (above the £500k threshold)?

Also, what would happen if I were to buy the rest of the property from the other parties at some future time?

Thanks.

[blueg33]

What price will the Transfer document show?

Will the transfer be of the property as a whole or will you split the title and transfer parts?

Stamp Duty is calculated on the Transfer price. So it all depends on how you are doing the deal.

[996c2]

blueg33 said:

What price will the Transfer document show?

Will the transfer be of the property as a whole or will you split the title and transfer parts?

Stamp Duty is calculated on the Transfer price. So it all depends on how you are doing the deal.

Thanks for the prompt reply!

I don't know the answers to your questions to be honest so I guess I will have to ask my solicitor when I get one.

[blueg33]

OK. Shared ownership is a bit of a minefield and in my experience rarely works well when problems arise.

The transfer is the legal document that moves the ownership of the building/land and will have a plan with a red 9usually) line demarking the property.

If you are taking the property as one transfer then the redline will be round the whole. Each party could be named as an owner on the transfer. In this case the price on the transfer will be £675,000 and SDLT is payable at 4%.

If the seller draws red lines around 3 parts then each could be transferred individually for £225,000, but there are issues:

1. It could be viewed as a "linked transaction" in which case you pay SDLT as if the price was £675,000
2. You can inadvertently create ransoms or gaps without ownership
3. Lots of legal work involved in dealing with obligations, rates etc (basically its way too messy to be sensible)

I think you need to decide between you why and how you want to share ownership and go and see a good specialist property lawyer. Depending where you are I can suggest some people.

Please note I am not a lawyer, but I have done many many land and property transactions, so I look at it from a Client type point of view.

[PurpleMoonlight]

You dont make it clear whether all three of you are buying the property as a new purchase, or the other two currently own it and you are buying one third from them.

If the former then the SDLT will be 4% of the total purchase price.

If the latter the SDLT will be 1% of just your purchase price.