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Where Taxpayers and Advisers Meet

Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

alexander24
Posts:4
Joined:Tue Aug 22, 2017 2:55 pm
Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby alexander24 » Tue Aug 22, 2017 3:36 pm

I would be very grateful for any advice on my situation, as the SDLT guidelines seem contradictory.

I have been cohabiting (ie not in a marriage or civil partnership) with my partner for 14 years in a house where we brought up our three children. They went to the local schools, I’m registered to vote here, use the local doctor, dentist, car is registered here, etc.

Three years ago I bought a buy-to-let flat (a leasehold, with 119 years left on the lease) which was gutted, and is still uninhabitable and not ready for letting.

This year my partner and I are separating. We intend to sell our main residence from the sale of which we will buy two houses – ie one each (two new main residences in our own individual names) close to each other so that we have mutual access to the children. As our current main residence is solely in my partner’s name, she has offered to give me a share of the value of the house when it sells, with which to buy my new property.

Would I be liable to the higher rate of SDLT on the new property given we are cohabitees and our main residence is solely in my partner’s name? And if so, would arranging to have my name put on the title deeds of our main residence before selling enable me to avoid this?

Thanks.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby maths » Wed Aug 23, 2017 6:37 pm

Would I be liable to the higher rate of SDLT on the new property given we are cohabitees and our main residence is solely in my partner’s name?
Yes. You are purchasing a new solely owned residence but that will be a second property (as you have a BTL) and you are not replacing your current residence (which means selling an interest therein which you don't have).
And if so, would arranging to have my name put on the title deeds of our main residence before selling enable me to avoid this?
It is perhaps arguable that whilst the home in which you both live is in the co-habitee's name only (ie the legal title) that you may or may not have become entitled to a beneficial interest in it (this is a bit of a complex area). Your co-habitee could execute a declaration of trust under which she states she holds or has always held (depending upon the facts) the legal title for herself and you say 60/40; 80/20 or whatever. You would then on you new purchase be replacing your residence and hence no 3% charge. I'm not sure if any anti-avpidance provision would defeat this approach.

SDLT Geek
Posts:232
Joined:Sun Apr 30, 2017 5:45 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby SDLT Geek » Wed Aug 23, 2017 8:49 pm

I agree with the comments by maths.

It might be worth exploring whether the gutted and uninhabitable flat counts as a "dwelling". It is difficult to say how derelict a property must be before it is no longer "suitable for use as a dwelling". If the roof has caved in and floors rotted out it is unlikely to be a dwelling. Stripping out the kitchen and bathroom is unlikely to be enough to stop it from being a dwelling, especially if the work is done in the course of a renovation.

alexander24
Posts:4
Joined:Tue Aug 22, 2017 2:55 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby alexander24 » Wed Aug 23, 2017 8:59 pm

Many thanks for your replies - I shall look into these options.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby maths » Wed Aug 23, 2017 9:41 pm

Re SDLT Geek's comments, with which I agree, the definition in the legislation for a "dwelling" includes " a building...if it is in the process of being constructed or adapted for such use".

alexander24
Posts:4
Joined:Tue Aug 22, 2017 2:55 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby alexander24 » Wed Aug 23, 2017 10:43 pm

Right, then it sounds like a Declaration of Trust is my best bet. I assume a quarter share in the main residence would constitute a 'major interest'?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby maths » Thu Aug 24, 2017 12:53 am

Three years ago I bought a buy-to-let flat (a leasehold, with 119 years left on the lease) which was gutted, and is still uninhabitable and not ready for letting.
Is the market value of less than £40,000?

alexander24
Posts:4
Joined:Tue Aug 22, 2017 2:55 pm

Re: Does BTL-owning cohabitee pay higher rate of SDLT on new main residence?

Postby alexander24 » Thu Aug 24, 2017 9:05 am

No, the market value of the BTL flat is at least double that.


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