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Where Taxpayers and Advisers Meet

Stamp Duty and Property Adjustment Order

nash0785
Posts: 2
Joined: Wed Nov 14, 2018 1:58 pm

Stamp Duty and Property Adjustment Order

Postby nash0785 » Thu Nov 15, 2018 12:52 pm

Hi All

I have a question with regards to Property Adjustment Order in order to avoid the higher SDLT. I am divorced and my ex-wife lives with my children in the mortgaged property. I cannot remove my title from the property because my ex-wife cannot afford the mortgage. I am trying to buy another property on my name however I found that I need a property adjustment order if I need to avoid the higher stamp duty.

I reached out to a family lawyer and was told that I will need a consent order and the property adjustment will be part of the content order. I am a bit worried because I dont want to have an order from the judge and find out that the document is not correct. Can anyone let me know if its the consent order that will help me avoid the higher rate SDLT.

And secondary my conveyancer for the new house has advised that if at the time of completion my name is on another title I will have to pay the higher rate SDLT. He has advised that even if I have the consent order I will still need to remove my name from the title. Is this true?

Thanks for your help.

Nash

SDLT Geek
Posts: 147
Joined: Sun Apr 30, 2017 5:45 pm

Re: Stamp Duty and Property Adjustment Order

Postby SDLT Geek » Thu Nov 15, 2018 10:08 pm

A property adjustment order could indeed be an order made with the consent of the parties.

If there is the right kind of property adjustment order then that property should not count against you for the purposes of the higher rates of SDLT. It would not then matter that your name remains on the title to the property. You could suggest to your conveyancers that they look at the guidance in HMRC’s Manual at SDLTM09797 https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09797

maths
Posts: 7479
Joined: Wed Aug 06, 2008 3:25 pm

Re: Stamp Duty and Property Adjustment Order

Postby maths » Fri Nov 16, 2018 5:15 pm

Following your divorce was there no financial order dealing with your and your ex-wife's interest in the marital home?

From what you say (re remaining on the legal title) it may be that a settlement of the property was required to be made (under MCA 1973 s24(1)(b)). This often is a so-called Mesher Order under which you/ex-wife each retain a beneficial interest in the property until (for example) any children reach age 18;the property is then sold and proceeds divided.

The above would be a property adjustment order the consequence of which would be the 3% charge would not apply on your purchase.

Alternatively, it may possibly be the case that your beneficial interest under the property had to be transferred to your ex-wife but you were required to remain on the legal title for mortgage purposes. In this case you would not hold a "major interest" in the ex matrimonial home and thus the 3% charge would not apply on your new purchase.

nash0785
Posts: 2
Joined: Wed Nov 14, 2018 1:58 pm

Re: Stamp Duty and Property Adjustment Order

Postby nash0785 » Fri Nov 16, 2018 6:54 pm

Thanks SDLT Geek and maths

Sorry for the delay in replying, I was at work

When we had our divorce we did not do any financial order because we did not find it necessary and the divorce was amicable. However because I am buying a new house I found I need to pay the 3% and hence I am trying to find a way out to avoid the 3%

I was just reviewing the questionnaire for the consent order and it feels this has a lot of information including financial settlement, pension etc. maths, your suggestion on Mesher Order looks like what I need. Just for the property. So If I do a Mesher Order and do not remove my name from the title will that work? I can say until my younger child turns 18 (she is currently 7 years).

Also does the Mersher order has to be specific (eg: MCA 1973 s24(1)(b)) to ensure that the document is valid to avoid the additional 3%.

Thanks for your help, I think I am getting there :)

Nash


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