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Harris
Harris, Law Specialist
Category: Law
Satisfied Customers: 1949
Experience:  Family Law - Specialist in Divorce, Financial Relief and Children Matters
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Stamp Duty on a second property- is my share of my current

Customer Question

Stamp Duty on a second property- is my share of my current home worth more than £40000?
In February 2015 my mum and i purchased a council property through the rights to buy scheme with a share of 50% each. The property was valued at £122000 and we were given a discount of £85000.
For every year we own the property we are entitled to 20% of the discount and therefore we are so far entitled to £17000 (20% of the discount ).
I'm about to purchase a second property with my partner and if my share on my 1st property is worth less than £40000 we would only need to pay the standard stamp duty.
how would my share be calculated
1) property purchase price £37000 + £17000 of the discount + the value the flat may have rose in the last 18months
2)full value of the property at the time of purchase £122000 + the value the flat may have rose in the last 18months
Thanks
Submitted: 5 months ago.
Category: Law
Expert:  Harris replied 5 months ago.

Hi, thank you for your question. Where did you get the information that if your share of current property is £40,000 you would only need to pay standard SDLT?

Customer: replied 5 months ago.
Afternoon Harris,one of the estate agents we visited said to me if my share in my current property was below £40000 then i would only need to pay standard SDLT
Expert:  Harris replied 5 months ago.

That is not the case and you are being misinformed by the agents. The new SDLT rates are clear that if you already own a property or have a legal interest in property you will need to pay the higher rate stamp duty. The only exemption is if you are purchasing the second property to directly replace your first as your main residence.

If you can confirm the value of the new property I can confirm the amount of stamp duty you will be liable for.

In the meantime if you found my information provided helpful please could you rate my response positively using the stars at the top as I will not be credited for answering your question without a positive rating. Thank you

Harris, Law Specialist
Category: Law
Satisfied Customers: 1949
Experience: Family Law - Specialist in Divorce, Financial Relief and Children Matters
Harris and other Law Specialists are ready to help you
Customer: replied 5 months ago.
Afternoon Harris,i have done some research myself into this and have come across the below:https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-propertiesthis says that a property under the value of £40,000 will not be taken into consideration when purchasing a second property.
Expert:  Harris replied 5 months ago.

But from what I understand, the new property you are purchasing will not be valued less than £40,000 - is that correct?

Customer: replied 5 months ago.
approx £300,000
Expert:  Harris replied 5 months ago.

Therefore the "transaction" for the second property is over £40,000 and the higher rate SDLT will apply.

The guidance does state that "Residential properties, including a tenancy or lease of a residential property, worth less than £40,000 will not be taken into account when determining if an additional residential property is being purchased." and the current property you own is worth £122,000 - I do not think that the inland revenue will consider the discount you obtained as they will look at the actual value of the property.

Customer: replied 5 months ago.
Harris,You have not answered my question ? you have just given your opinion ?
Expert:  Harris replied 5 months ago.

The answer is that both properties will be taken into account as they are each valued at more than £40,000.

Customer: replied 5 months ago.
to be clear you are saying that my share of the current property i am in will be valued by inland revenue at more than £40000 ?
Expert:  Harris replied 5 months ago.

The government guidance is that it is the value of the property not your share that gets taken into account and in any event even if you were to look solely at your share of 50% this will have been valued at £61,000 in February 2015 - the whole value of the property gets taken into account and the right to buy discounts will not apply

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