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Where Taxpayers and Advisers Meet

Surcharge refund - but fiancee has since been gifted a property

Beanburger123
Posts:2
Joined:Sat May 14, 2022 11:34 am
Surcharge refund - but fiancee has since been gifted a property

Postby Beanburger123 » Sat May 14, 2022 11:39 am

I can't seem to find a straight answer anywhere for this.

Scenario

I purchased a flat 5 years ago (Property A). It was my sole residence.

I met my now fiancee. She moved in with me. She owned no properties. We lived there together for about a year.

We then purchased a home together in 2021 (Property B). We paid the surcharge because I still owned the flat.

I am now selling my flat. My expectation is that I will be due a refund on the surcharge.

The issue is that one year after we bought our home, my fiancée's mother gifter her a property (property C). It has never been lived in by me or the fiance, it has always been rented out. It is currently empty - no mortgage. I currently have no beneficial interest in that property as we are not yet married.

Question: does my fiance receiving the property now mean that we cannot claim a refund?

All of this is in England

someone
Posts:689
Joined:Mon Feb 13, 2017 10:09 am

Re: Surcharge refund - but fiancee has since been gifted a property

Postby someone » Mon May 16, 2022 10:25 pm

I believe you can reclaim the 3%

1. I might be wrong. Greater minds than mine might chime in later.

2. I think there are fairly tight deadlines for reclaiming - so I'd make sure your solicitor is onboard before you exchange. (My wife and I did a transfer of equity shortly after H&W transfers became exempt from the 3% charge. The fact that the solicitors disagreed with our calculation of the SDLT calcs only came to light after the transfer was done - they disagreed with us on every bit of the calculation! That caused me more than a bit of unnecessary stress getting it sorted quickly)

3. I believe you can DIY a reclaim - so you don't need your solicitors to do it, and they might say a tax reclaim is outside their remit - but if you go this route I'd suggest finding the relevant forms and seeing how scary they look well in advance. I'd also assume any accountant could help with this if necessary.

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

Re: Surcharge refund - but fiancee has since been gifted a property

Postby maths » Tue May 17, 2022 5:06 pm

It's a while sine I looked at this SDLT 3% legislation but it doe seem to me that there is any entitlement to a refund of the 3% paid surcharge; but not because of the property C gift.

The problem is that the new purchase was a joint purchase by you/fiancee and whilst on a sale of the former home (owned solely by you) the new jointly owned home is a replacement of your former residence this is not the case for your fiancee because she effects no sale of a former residence.

It seems anomalous that if you had bought the new home and then sold your old home (within the defined 3 year period) a refund of the 3% would have applied; however, it seems to me that your fiancee joining in to effect the purchase with you precludes any 3% refund.

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

Re: Surcharge refund - but fiancee has since been gifted a property

Postby maths » Tue May 17, 2022 5:19 pm

Apologies: Replace "It's a while sine I looked at this SDLT 3% legislation but it doe seem to me that there is any entitlement to a refund of the 3% paid surcharge; but not because of the property C gift "

with

""It's a while since I looked at this SDLT 3% legislation but it does seem to me that there is NOT any entitlement to a refund of the 3% paid surcharge; but not because of the property C gift "

someone
Posts:689
Joined:Mon Feb 13, 2017 10:09 am

Re: Surcharge refund - but fiancee has since been gifted a property

Postby someone » Wed May 18, 2022 7:04 pm

I've gone and dug up the legislation and I believe a reclaim is possible.

https://www.legislation.gov.uk/ukpga/2003/14/schedule/4ZA

For the fiancee, condition C is false
For the OP, condition D is false (in particular under subsection 7)

But I'm usually wrong about law too...

Beanburger123
Posts:2
Joined:Sat May 14, 2022 11:34 am

Re: Surcharge refund - but fiancee has since been gifted a property

Postby Beanburger123 » Thu May 19, 2022 3:50 pm

Thankyou all so much for the responses so far. Property A is currently on the market so hopefully I can get this bottomed out before the sale goes through so that I know what I need to do well ahead of time.

It seems to me from the responses so far that nobody believes that the fact that my Fiance received the gift of Property C prevents the refund.

The issue, it seems, is that Fiancee is not disposing of her main residence, only I am. However my reading of the handbook is that because at the effective date of purchase of Property B, my Fiance owned no other property, and that she lived with me at Property A (we can show documents to evidence this), then surely the only disposal required is that of Property A?

As for the points raised by User:Maths, I think I would be looking to apply for the refund myself. I have tried to raise this with my conveyancer but quite frankly they don't want to deal with any of the SDLT matters and have told me to seek independent advice.

Are there any further opinions on this?


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