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bigduckontax
bigduckontax, Accountant
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Re Stamp Duty. I purchased a house last year and put me

Customer Question

Re Stamp Duty.
I purchased a house last year and put me and my daughter on the deeds. ( Student house). As we did not sign anything else it is presumed that at the moment we own the house jointly at 50% each. The house is worth £250k.
Question if we now change the split to I own 99% and she owns 1%, is there any stamp duty implications as no consideration and no mortgage on the property. Also if leave until after April, will I be caught by the new stamp duty rules.
Thanks
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help you with your question.
As far as you are concerned this is a second home and an additional Stamp Duty Land Taz (SDLT) of 3% is payable if you make these changes after All Fools Day 2016. Tax Café warn that changing the Joint Tenancy to a Tenancy in Common, which is what you propose, will attract SDLT viz:
'One major drawback to property investment partnerships, however, is the danger of incurring Stamp Duty Land Tax charges at frequent intervals. Since 22nd July 2004, Stamp Duty Land Tax has been payable whenever a partner:
(i) Introduces property into a partnership,
(ii) Takes property out of a partnership, or
(iii) Reduces his profit share.
In the case of a reduction in profit share, there must be some consideration given for the transaction concerned (cold comfort, as there usually will be, even if only accounted for via the partners' capital accounts - which is enough to trigger the charge).'
I would submit that the change involves a consideration of 49% of 250K (122.5K) even though no moneys change hands and SDLT will be applied at the appropriate rate. Fortunately for you SDLT does not kick in until 125K so you will be just under the wire and escape this impost.
I do hope that my reply has been of assistance.
Customer: replied 10 months ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  bigduckontax replied 10 months ago.
I would be delighted to help, but I am answering you from a time zone seven hours ahead of GMT which would make telephone call costs prohibitive. I am on 006625873387.
Customer: replied 10 months ago.
Hi,If as you recommend I change the ownership now. I have a £30k loss on the rent of this house this year.For the tax year 2015/16 would the loss be split 50/50 as per initial split or would I keep 99% of the loss to offset my now 99% of the rental income coming through in the future?Also my daughter's split can I say it was 1% all year of the rental market as that is what we intended, but never got around to formalising or do I have to say she had 50% until now and 1% afterwards.thanks
Expert:  bigduckontax replied 10 months ago.
I merely pointed out that the additional 3% SDLT comes into effect 1 April 2016.
The loss would be split 50/50 for the period up to the change and at 99/1 thereafter. You would have to do some calculations to determine this depending on the exact date of change.
Do not forget that with this transfer your daughter will be liable to Capital Gains Tax (CGT) on 50% of the gain made on transfer. The current market value of the house will be used to determine this. Your question is silent as to the purchase cost so I cannot calculate the gain which will be taxed at 18% or 28% or a combination of the two rates depending on her income including the gain in the year of sale. She has an Annual Exempt Amount (AEA), currently 11.1K (not cumulative) to offset this gain.

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