Can anybody help with Stamp Duty Advice

[33q]

Not a straightforward situation but here we are...

Myself, Wife, Brother and Brother's Wife own 25 percent each of a property valued at £154k. Not our own home.

My brother has MND and he needs to put his affairs in order...a sad situation.

My wife and I have agreed to buy out brother and his wife

Stamp duty threshold is free up to £40k and then 3 percent.

Individually I would buy out at £38.5k from brother and my wife would buy his wife out at £38.5k.

Would the HMRC look at this way. Obviously I am going to ask them...but thoughts and ideas to save £2310 greatly accepted.

[chrisch77]

Sorry I can’t answer your question, however it could be immaterial if you already own a house (primary residence) as I expect you’ll get clobbered the ‘2nd home’ or ‘buy to let’ rate of 3% anyway for any transaction from 0-125k.

[Mr Pointy]

I'd say no you won't have to pay 3% (the higher rate portion) of the £38.5k (the consideration) because it's below the £40k threshold. However, that's just my guess from reading the HMRC website.

https://www.gov.uk/guidance/stamp-duty-land-tax-bu...

[33q]

The key question is whether HMRC will consider the transactions as one or two

[anonymous-user]

I don’t know the answer definitively, but I think yes you will have to pay 3% of £77k

Here’s why I think (but don’t know and could easily be wrong) that

A married couple ends up owning the whole property. That each is buying only 25% that is below the 40k threshold doesn’t matter: the married couple is buying the 50% and the property as a whole is over £40k, therefore sdlt is due

Married couples are treated differently in some sdlt things than two random strangers would be on the same transaction

https://www.gov.uk/guidance/stamp-duty-land-tax-bu...

The 25% each piece is a construct to attempt - and only to attempt - to avoid sdlt. It doesn’t hold water

As I say, that could well be totally wrong

Let us know what HMRC rules please

Edited by anonymous-user on Sunday 22 September 21:01

[springfan62]

The way I read it you and your wife are buying half the property for £77k which is above the £40k exemption limit, therefore you will have to pay the 3%.

[33q]

JPJPJP said:

I don’t know the answer definitively, but I think yes you will have to pay 3% of £77k

Here’s why I think (but don’t know and could easily be wrong) that

A married couple ends up owning the whole property. That each is buying only 25% that is below the 40k threshold doesn’t matter: the married couple is buying the 50% and the property as a whole is over £40k, therefore sdlt is due

Married couples are treated differently in some sdlt things than two random strangers would be on the same transaction

https://www.gov.uk/guidance/stamp-duty-land-tax-bu...

The 25% each piece is a construct to attempt - and only to attempt - to avoid sdlt. It doesn’t hold water

As I say, that could well be totally wrong

Let us know what HMRC rules please

Edited by JPJPJP on Sunday 22 September 21:01

,

I had not read this advice...thank you...I guess we are stuffed...still worth checking. A shame given the circumstances but the revenue won’t be interested in the background.

[RacingPete]

Slightly O/T but when I asked my local MP why can't they measure child benefit on total marriage income they said it was too difficult to work out... But come anything tax related turns out it is easy! Majority of the financial laws in this country don't benefit staying married until your dead!

I say get a divorce and then buy out if you are that keen to save money.

[trickywoo]

Could you give him the equivalent sum and then because you have been such a great bro he leaves you the share in the house in his will?

[Mattt]

Could you buy just his share, and then a while later buy his Wife’s share?

[The Moose]

trickywoo said:

Could you give him the equivalent sum and then because you have been such a great bro he leaves you the share in the house in his will?

Unless he has a truck load of other assets (unlikely) and the OP has the cash to give him a gift of some sort, then this seems sensible?

[Sir Bagalot]

Mattt said:

Could you buy just his share, and then a while later buy his Wife’s share?

^^This. As long as a mortgage isn't involved.

You could do all the paperwork yourself. It will mean making land registry fees twice, but thats cheaper than 3%

[33q]

Thank you all for your input...some good ideas

I phoned the SDLT Office...I'm stuffed!

They can't answer such queries on their helpline....too complex...out of paygrade etc

Have to write in (no email) to get a formal answer....turnaround time 6 weeks!

I pressed a bit and the even if I separated the transactions they would be counted as part of a 'scheme'....in other words the possible loophole is blocked

I need to get on with it so it will give HM Government the chance to squander another chunk of my money!