This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Higher rate SLDT when purchasing main residence after divorce?

Belle Verve
Posts:2
Joined:Fri Jan 21, 2022 2:40 pm
Higher rate SLDT when purchasing main residence after divorce?

Postby Belle Verve » Sat Jan 22, 2022 8:56 pm

Hi advisors,

I am in the middle of getting an amicable divorce, financial situation is as follows:-

1. Marital home is owned solely by my husband who purchased the property prior to getting married and will continue to live there post divorce. I will move out of the marital home.
2. I own a buy-to-let property solely in my name that I purchased prior to getting married. The property is let with tenants and have no intention and have never lived there.
3. We own another buy-to-let property 50/50 that we purchased after getting married. We both raised funds to purchase the property by remortgaging our individually owned properties plus my husband made a substantial cash contribution. Although we own the property 50/50 I contributed 1/3 and my husband 2/3 to the cost of the property. There is no mortgage on this property.
4. There are no other properties involved.

We have agreed on a simple divorce financial settlement whereby I transfer my stake (50%) of the BTL property we own together to my husband and he raises around 50% of of the properties current market value via a new BTL mortgage, where those funds come to me.

I am in the process of purchasing another property that I will move into post divorce and it will be my main residence. I do not intend to sell my BTL property. I will finance this new property with the funds from the divorce settlement and by raising a new mortgage.

The question is under these circumstances will I have to pay the higher rate (+3%) SLDT when purchasing my new main residential home?

bd6759
Posts:3744
Joined:Sat Feb 01, 2014 3:26 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby bd6759 » Sun Jan 23, 2022 12:33 pm

Yes you will.

Belle Verve
Posts:2
Joined:Fri Jan 21, 2022 2:40 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby Belle Verve » Mon Jan 24, 2022 10:15 am

Hi, thank you but what is the rational for the higher SLDT?

bd6759
Posts:3744
Joined:Sat Feb 01, 2014 3:26 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby bd6759 » Tue Jan 25, 2022 1:36 am

On the date of completion you will own two or more dwellings, therefore you are (potentially) liable to pay the additional rate.

However, and I’m possibly correcting my previous response, you are not liable to the additional rate if you are replacing an earlier residence. That begs the question, did the divorce settlement require you give up any rights you had over the matrimonial homes where you lived? If it did, there is an argument that you have disposed of an interest in a dwelling that was your residence. Just because you weren’t on the deeds doesn’t mean you didn’t have an interest in the property.

Worth exploring.

maths
Posts:8425
Joined:Wed Aug 06, 2008 3:25 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby maths » Tue Jan 25, 2022 2:59 pm

Prima facie, you did not have any beneficial interest in the matrimonial home. On this basis you have not disposed of any interest in it and thus when you acquire you brand new residence the 3% surcharge will apply.

There may or may not be various arguments that whilst prima facie you did not have an interest in the former matrimonial home you in fact did so; I would, however, tend to the view that any success in this argument is unlikely to succeed.

bd6759
Posts:3744
Joined:Sat Feb 01, 2014 3:26 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby bd6759 » Wed Jan 26, 2022 1:34 am

I think there is ample judicial opinion given over the last century that would confirm a wife does have an interest in the matrimonial home.

The question is whether it is a major interest. I think it could be. S117(2) FA2003 defines a major interest as one that subsists at law or in equity. That means she does not need to be on the deeds to have a major interest.

It will boil down to the separation/divorce agreement. It is certainly worth pursuing.

maths
Posts:8425
Joined:Wed Aug 06, 2008 3:25 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby maths » Wed Jan 26, 2022 2:08 pm

The ground rules for ascertaining divorcing spouse's beneficial interests in the marital home have changed significantly following Stack v Dowden and Jones v Kernott.

In this present case the husband purchased the property prior to marriage and at all times he has been the sole legal owner. The start point is thus that he is also sole beneficial owner.The wife can only be deemed to have a beneficial interest if there was by the parties at some point a common intention that the wife was to be treated as possessing a beneficial interest which requires significant investigation as to all the surrounding facts.

I therefore disagree with bd.

bd6759
Posts:3744
Joined:Sat Feb 01, 2014 3:26 pm

Re: Higher rate SLDT when purchasing main residence after divorce?

Postby bd6759 » Fri Jan 28, 2022 1:32 am

Both those cases confirm that there is likely to be a constructive or resulting trust where the matrimonial home is concerned.
The OP hasn’t come back with any facts, but it is unlikely the husband was the sole contributor to the costs.


Return to “Stamp Duty, Stamp Duty Land Tax, SDLT”