Stamp Duty

[pinkcows]

Hi...my husband has inherited a house..we need to knock it down and rebuild it..the land is worth 100,000, we have been told we have to pay 1250 stamp duty??

[pinkcows]

Yes.the mortgage guy said for me to be on the mortgage, that is why theres the fee
..thankyou for your time and expertise

[New Judge]

But the test must surely be made at the point of gifting, 'Chico. If there is no mortgage outstanding at that time then no SD is payable. Are you saying that if a mortgage is taken on the property at any time in the future then SD would be payable retrospectively?

[Buenchico]

I'm saying that the inheritance part of the situation is dead and gone.

Mr P now owns a property that he wants to take out a mortgage on, in order to develop the site. (It's entirely irrelevant as to how he came by the property. The situation would be the same if he'd owned it for years, rather than having recently inherited it). However he's unwilling, or unable, to take on the mortgage on his own. He therefore propses that Mrs P should take on the mortgage jointly with him but the lender won't allow that to happen unless Mrs P becomes the co-owner of the property. He therefore gifts half of the property to Mrs P. Despite there being no consideration, HMRC still see Mrs P's acquisition as having a chargeable value upon which SDLT must be paid.

[Barmaid]

I dont know anything about how SDLT works on a mortgage of an existing property. But it strikes me that if you are within 2 years of death of the deceased, you do a Deed of Variation so instead of leaving the property to your husband, it is left between you and the husband.

In my view, you might want to take some advice on this.

[Buenchico]

I'd been thinking, Barmaid, that it was unfortunate that the property wasn't left jointly to Mr & Mrs P, as that would clearly have avoided the SDLT problem created by the need to transfer half the title, but I'd forgotten about deeds of variation.

Your suggested solution would seem to have considerable merit in it to me.

[Buenchico]

For Pinkcows:
https://www.gov.uk/alter-a-will-after-a-death

[New Judge]

The solution to me is for Mr pinkcows to gift half the property to Mrs pinkcows. No SD payable. Then he approaches a mortgage lender for a mortgage. But I'm going to bed!

[bednobs]

However it will be a new house so inheritance has nothing to do with it.

[bednobs]

So if for example a deed of variation is possible and the both own it I think sd is still chargeable on the land because it's going to be a new build