Transfer of Equity Stamp Duty ?

[Howson]

Wondering what the members think applies in this case:

A person already with 2 properties is in addition now inheriting 1 property fully from fathers estate, value circa £190k. Planning to remortgage (once probate completed) for circa £130k. This £130k to be used towards the below transaction.

He is also inheriting 10% of a 2nd property (value £320k), and wishes to buy-out the other 90% (9 people with 10% each also). To do this he planning to raise a mortgage of £200k on this 2nd property.
The 2 mortgages will then allow ownership of the 2nd property as well as the first.

In trying to work out any taxes - (after estate settled) - I believe only 'Stamp Duty' applies to the 2nd property by way of 'transfer of equity'.
My question is - 'is this correct and do the new rules apply (it will go through after 1st April)' ?

My calculation is:
Consideration amount to pay off the 90% = £320k x 90% = £288k
1st 125k x 3% = £3750
next 125k x 5% = £6250
next 38k x 8% = £3040
Total Stamp duty = £13,040

I'd be happy for any thoughts on this.
Thank you

[maths]

The extra 3% SDLT charge applies to the acquisition of the 90% re the second property.

The first property was inherited and no SDLT applies to it (whether it is subsequently remortgaged or not).

Agree figures re SDLT charge.

[Howson]

Great, thanks for this Maths, that's really helpful.

[Howson]

Following on from the above, the transactions have been completed.

There is However a query on the Stamp Duty charged.

The property value of the 2nd property, actually came out at £290,000 - and with his inheritance of 10%, this left 90% (£261,000) to be raised, and was raised as below via a combination of the 2 mortgages.

We thought that the stamp duty would be on 90% of the value, as he wouldn't pay on his own 10% ownership (ie on £261,000 = £10,800), but the conveyancer charged it on the full £290,000 (ie £13,200). When this was queried the reply was:
Unfortunately, Stamp Duty is payable on the purchase price in the contract i.e. £290,000.
Although, you inherited a 10% share under the will and so this was treated as a gifted deposit for your mortgage, stamp duty remains to be paid on the full amount.
We have to pay what the Inland Revenue demand.
Your stamp duty has been paid to the Inland Revenue and if you feel that this is incorrect and you are due a refund you will need to contact the Inland Revenue regarding this. I attach a copy of the return submitted and you will need to quote the reference in any communication using the reference at the bottom of each page.


If anyone could kindly shed any light that would be great.

[maths]

Bit bemused.

SDLT is charged on chargeable consideration which i would have thought was the value of the 90% purchased (the 10% having been inherited).

I don't see how your 10% is a "gifted deposit for your mortgage" and counts as consideration.

[Howson]

Thanks, yes I agree, seems a little strange.
I think he should contact HMRC and seek a refund if applicable.

[maths]

SDLT is self assessed.

One option therefore is to lodge an amended return or write referring to the perceived error in the original return.

This may help:

https://www.gov.uk/guidance/stamp-duty- ... ne-returns

[Howson]

Thanks for that, its most helpful.