SDLT for 1% Second home purchase

[arij6]

Hi. Advice here will be greatly appreciated.

Scenario

Person A - Already has two residential properties
Person B - Has never owned a residential property before

They purchase a new residential property with Person A paying for and owning 1%, and Person B paying for and owning 99%.

So question is, would the stamp duty be calculated as a 1st purchase or 2nd purchase rates? This will be Person A's third purchase of a property, but they are only buying 1%.

Hope this makes sense.

[maths]

Not a first time purchase.

[someone]

Not a first time purchase.

But does the higher rate still apply if the share bought by person A is worth less than 40K? (I have no idea if the 40K threshold applies to the entire property value or the share bought by person A)

I'm guessing that person A needs to be on the mortgage (possibly a parent) but wants to buy a property for person B (a child)

And if that's the case, could person A own 0% rather than 1% and avoid the higher rate SDLT?

[maths]

But does the higher rate still apply if the share bought by person A is worth less than 40K? (I have no idea if the 40K threshold applies to the entire property value or the share bought by person A)

It is consideration for the transaction that is in point.

And if that's the case, could person A own 0% rather than 1% and avoid the higher rate SDLT?

This is an interesting point. If A does not own any part of the beneficial interest in the purchased property (ie as you suggest 0%) then A is not a "purchaser" and the purchase in the post would then be a first time purchaser. If A and B are to be joint mortgagees and hence they are both to be on the legal title the mortgage company sometimes requires each party to have a beneficial interest (however) small.

[arij6]

Not a first time purchase.

So to give a bit more background info

I am person A and my wife is person B. She has the funds for deposit and wants to purchase a house, the only reason we are adding my name to the deed is because she doesn't have enough income to get the mortgage that we need. Hence we thought of adding my name as a 1% owner. But now by doing this, we will have to pay the higher rate stamp duty - 17k more (property value 400k).

Can it not be argued that this is her purchase, not mine, and therefore we should pay lower stamp duty?

[SDLT Geek]

Unfortunately first time buyers' relief does not apply if the higher rates of tax (the 3% surcharged rates) apply. See the new FA03/Sch6ZA/para1(7).

Because A and B are married then even where B buys alone, the circumstances of A are relevant to whether the 3% surcharge applies. If A buying alone would have paid the surcharge then the transaction as a whole is liable to the surcharge, see FA03/Sch4ZA. A has two properties here. So it seems likely that the 3% surcharge will be due. Unless A is within the exception from the surcharge for the replacement of an only or main residence (Condition D in Sch4ZA/para3 is failed).