inherited property ....AGAIN!!

[kazzie]

hi i hope you can help me,

my partner was left a one third share of a property when his grandad died. his mum and brother were left the other 2 thirds.

the house is valued at 220,000 and my partner has taken out a mortgage to buy his mum and brother out so he owns the property outright.

does he have to pay 1% stamp duty on the purchase even though he already owns 1 third of the property and the mortgage he is getting is for 150,000?

thanks in advance

[AvocadoK]

Hi Kazzie
The amount he'll be paying is within the 0% band for stamp duty land tax (first £175,000) as long as he completes before 31 December. After that, the threshold drops to £125,000, so there would be 1% duty on whatever he pays. The fact that he already owns a third doesn't really affect matters - he just pays duty on the amount he pays for the other two thirds.
AK

[kazzie]

thank you for your reply, our solicitor is under the impression that he will have to pay 1% on 220,000, is there any information in writing that i can show him as we could really do without having to pay an extra 2 and a half grand!

[AvocadoK]

It's a fairly fundamental principle of stamp duty land tax that tax is charged on the consideration paid for the asset. Refer him to the HMRC SDLT manual para SDLTM03700 (they are on the HMRC website). I'm surprised that the solicitor cannot see that SDLT is only payable in respect of the two thirds your partner is buying. I'd be tempted to go elsewhere.