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Buying sibling out of jointly owned property - how does stamp duty apply?

Last post Mon, Jul 09 2007, 11:01 PM by Fiamold. 7 replies.
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  •  Mon, Jul 09 2007, 11:01 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    conmankiller:No pobs, Same results just put differently, what was that they said about great minds ?  : - )

    You sure it isnt fools? 

    • Post Points: 5
  •  Mon, Jul 09 2007, 6:02 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    No pobs, Same results just put differently, what was that they said about great minds ?  : - )

    Be quiet in the cheap seat below.     : - )

    • Post Points: 20
  •  Mon, Jul 09 2007, 5:59 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    Sorry conmankiller, we were both answering at the same time... :)
    • Post Points: 20
  •  Mon, Jul 09 2007, 5:49 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    I agree with that Nic, it's just that I have worded it differently, and your quite correct the exemption does not apply to siblings, only married or civil partners are entitled to that.

    But in a nutshell what we are both saying is that whatever the value of the Brothers share is, that would be the amount that SDLT is payable on, and that % figure, would depend on which valuation banding that share falls into.

    up to £125,0000%£125,001 - £250,0001%£250,001 - £500,0003%£500,001 or more4%

    • Post Points: 20
  •  Mon, Jul 09 2007, 5:46 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    Thanks for both answers, very helpful. I'll call HMRC tomorrow and will let you know the official line.
    • Post Points: 5
  •  Mon, Jul 09 2007, 5:33 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    I stand to be corrected, but I believe you may be liable for stamp duty anyway. The exemption you refer to applies in the case of marriages and civil partnerships, but not siblings, I believe. I hope I'm wrong.

    But if I'm not, the amount owed would be based on the value of what you are buying and not the amount of outstanding mortgage. So if the property is worth £250k and you are buying his 50% share, your liability to SDLT would run to the £125k you would be paying him.

    In that situation, you would be exempt. If the share you are buying is under £250k, you would be liable to 1% stamp duty. You (and your girlfriend) would only be liable to pay 3% if the share of the property you are buying is, say £550k and your 50% share is £275k.

    Hope that makes sense. If I'm right, you might want to talk to an accountant about the possibility of buying a smaller share of the property that keeps you under the 1% SDLT charge level - and then buy another slice a bit further down the line. That's possible with shared ownership schemes and might apply here...

    Anyway, the number to ring is 0845 603 0135. Come back and let us know what they say as I'd be interested to know myself.

    • Post Points: 35
  •  Mon, Jul 09 2007, 5:33 PM

    Re: Buying sibling out of jointly owned property - how does stamp duty apply?

    As you already own 50% and have paid stamp duty when you bought your share, then only your Brothers 50% share is actually changing ownership, therefore stamp duty would only be payable on your Brothers portion, at the threshold rate applicable to the value of his share that is changing hands.

    You may find that this share would be worth over £125k but below £250k, therefore would only attract stamp duty at 1% because it now falls into the lower threshold duty bracket.

    • Post Points: 5
  •  Mon, Jul 09 2007, 4:51 PM

    Buying sibling out of jointly owned property - how does stamp duty apply?

    My brother and I jointly own a flat 50:50 with a mortgage of 40% of its value. We currently live there with my girlfriend but my brother is now thinking of moving out and one of the options is for me and my girlfriend to buy him out.

    We would need to take out a new joint mortgage to repay the existing mortgage and to pay my brother his share of the equity. As I understand it, if I were buying my brother out on my own then stamp duty would not be applicable. However, does the fact that my girlfriend is contributing money have an effect on this? If so, would stamp duty be payable on the whole value of the property or just my brothers share given that I already own 50%?

    The property is over the 3% threshold so this could have a large impact as to whether we would look into this in more detail.

    Thanks for any advice!

    Nick

    • Post Points: 35